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Business A level > Cash Flow > Flashcards

Flashcards in Cash Flow Deck (14)
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1
Q

What factors affect cash flow

A

Sales can change
Costs can change
Credit can change
Stock levels can change

2
Q

How do you improve cash flow from customers

A
  • reduce trade credit
  • chase up late payments
  • Employ a factor
3
Q

Ways to increase cash flow?

A
  • de stock
  • loans
  • improve cash inflows from customers
  • increase sales revenue
4
Q

What is cashflow

A

The movement of cash in and out of a businesses bank account

5
Q

Inflows include

A

Sales revenue
Capital
Loans
Grants

6
Q

Outflows

A

Purchases
Rents & rates
Utilities
Wages and salaries

7
Q

Why do businesses forecast cash flow

A
  • identify potential cashflow problems in advance
  • Make sure that there is sufficient cash available to pay suppliers
  • provide evidence in support of loan application
8
Q

What can a lack of cash cause

A

Liquidity

Insolvency

9
Q

What is liquidity

A

The amount of liquid assets available to a business

10
Q

What is insolvency

A
  • Person/business who are incapable for paying their debts
11
Q

How to calculate net cashflow

A

Inflows - outflows

12
Q

What is needed to build a cash flow forecast

A
  • opening balance
  • income per period
  • expenditure per period
  • closing balance
13
Q

How to calculate closing balance

A

NCF + OPENING BALANCE = CLOSING BALANCE

14
Q

LAST MONTHS CB =

A

Next months opening balance

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