3.3 Cash Flow Flashcards
1
Q
What is Cash Flow?
A
Money going in and out of the business
2
Q
Give the formula for Net Cash Flow
A
Net Cash Flow = Receipts - Payments
3
Q
What is an Opening Balance?
A
The cash position of a business at the start of the month
Also closing balance of previous month
4
Q
Give the formula for Closing Balance
A
Closing Balance = Net Cash Flow + Opening Balance
It becomes the opening balance of next month
5
Q
What are Cash Flow Statements?
A
Financial Documents which analyse the past inflows and outflows of cash in a business
6
Q
What do Cash Flow Forecasts help to predict?
A
When firms might face a liquidity problem
7
Q
What is liquidity problem?
A
Lack of cash
8
Q
What are the solutions to cash flow problems?
A
Increase sales
Reduce costs
Get a loan
