Unit - Finance - Cash Flow Forecasting Flashcards
(12 cards)
What are cash inflows?
Sums of money received by a business
What are cash outflows?
Sums of money paid out by a business
What is the the cash flow cycle?
businesses need to pay out money for the costs off producing an order or for assets, before they get paid for that order. the delay between money coming in is in the cash flow cycle
What is working capital?
The money available to a business for it’s day-to-day running costs
what length does the cash flow cycle depend on?
The type of product and credit payments
What does creditors mean?
People who are owed money by the business
What is payable?
Money that the business owes
What is receivable?
Money that is owed to a business
What are debtors?
People who owe a business money
What is the ideal cashflow position?
Where there is a short period of time from the start of production to the sale of goods, and where the business is given a longer credit period by its creditors
What do cashflows forecast?
Shows the amount of money that managers expect to flow into the business and flow out of the business over a period of time in the future
Why isn’t cash flow always accurate?
It can be based on false assumptions about what’s going to happen since things can change suddenly
