13 - Using Cash Flow Forecasting

Question 0

Liquidation

Answer 0

This is turning assets into cash and may be insisted on by courts if suppliers have not been paid.

Question 1

Cash flow

Answer 1

The total cash payments (inflows) into a business minus the total cash payments (outflows).

Question 2

Insolvent

Answer 2

When a business cannot meet its short term debts.

Question 3

Cash inflows

Answer 3

Payments in cash received by a business such as those from customers or from the bank.
E.g. Receiving a loan.

Question 4

Cash outflows

Answer 4

Payments in cash made by a business such as those to suppliers and workers.

Question 5

Debtors

Answer 5

These are customers who have bought products on credit and will pay cash at an agreed date in the future.

Question 6

Credit sales

Answer 6

Value of goods sold to customers who do not pay cash immediately.

Question 7

Cash flow forecast

Answer 7

An estimate of a firms future cash inflows and outflows.

Question 8

Net monthly cash flows

Answer 8

The estimated difference between monthly cash inflows and outflows.

Question 9

Opening balance

Answer 9

Cash held by a business at the start of the month.

Question 10

Closing balance

Answer 10

Cash held by a business at the end of the month - becomes next months opening balance.