Using cash flow

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  • Created on: 11-04-14 09:25
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  • 3.3 Using cash flow
    • Cash flow statements
      • cash flow: the movement of money in and out of a business.
      • Cash in: money that flows into the business.
      • Cash out: money that flows out of the business.
      • Cash flow statements
        • a record of all the cash flowing into and out of the business.
        • shows opening balance at the start of each month and closing balance at the end.
          • Closing balance: cash available at the end of the month.
          • Opening balance: cash available at the start of the month.
      • Net cash flow: the difference between total cash in and total cash out.
    • The importance of cash flow statements
      • Businesses normally produce a forecast of their expected cash flow at the start of the year. this allows them to spot any potential cash shortfalls in advance.
      • Identifies negative closing balance
      • identifies positive closing balance
      • Can help set targets for future years
      • Monitor actual cash flow against forecast
    • Solutions to cash flow problems
      • Slow down money flow out of the business
      • Reduce amount of money flowing out
      • Speed up money flowing in
      • Increase money flowing in


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