Cash Flow Forecasts

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  • Cash Flow Forecasts
    • A cash flow forecast is a statement showing the expected cash IN and cash OUT each month for the next 6 to 12 months
    • Advantages
      • Manager should be better prepared
      • Increased confidence of the banks
      • Increased confidence of potential investors
      • Lower interest payments as cash is borrowed for shorter period of time
    • Total Payments is calculated by adding all the expected cash OUT
      • E.g; Wages -Rent -Stock -Electricity
    • Opening balance is the amount of cash at the start of the month
    • Total Receipts is calculated by adding all the expected cash in e.g. from cash sales and credit sales
    • Closing balance is the amount of cash at the end of the month, i.e. 'total receipts-total payments'

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