Cash flow

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  • Created by: konradeke
  • Created on: 30-03-16 19:27
What are examples of cash inflows?
Cash sales, Payment from debtors, Owners capital, sale of assets, bank loans
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What are examples of cash outflows?
Purchasing stock, paying wages, paying debts and purchasing assets
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When do credit sales appear?
The month of the cash reciept
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When do credit payments appear?
In the month of the cash outflow
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How do you work out net cash flow
= cash inflows- cash outflows
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What is the opening balance?
How much money the business has at the start of each month
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What is the closing balance?
How much money the business has at the end of each month
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How do you calculate closing balance?
Opening balance + net cash flow
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What factors affect cash flow?
Transaction types, Timings of cash flows, Nature of business
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When would cash inflows cause cash flow problems?
When they are slow
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How could they speed up payments?
Discounts for early payments or penalties for late payments
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How could a firm slow down outflows?
Negotiating longer payment terms from suppliers, When a business owes money to a supplier these are referred to as payables.
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What are some causes of cash flow problems?
Credit sales, Overtrading, Internal management, Seasonality and unexpected events
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How can a business improve cash flow?
Increasing the volume of the inflow of cash, speeding up the timing of the inflow of cash, Reducing the volume of the outflow of cash, Slowing down the timing of the outflow of cash
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What is debt factoring?
The process of selling a business' debts
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What is the sale of assets?
Turning an obsolete asset into cash, sale and leaseback (turning an asset into cash whilst being able to use it through a lease agreement
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How can a business improve cash outflows?
Delaying payments to suppliers, Stock management, Reducing overhead spending
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Card 2

Front

What are examples of cash outflows?

Back

Purchasing stock, paying wages, paying debts and purchasing assets

Card 3

Front

When do credit sales appear?

Back

Preview of the front of card 3

Card 4

Front

When do credit payments appear?

Back

Preview of the front of card 4

Card 5

Front

How do you work out net cash flow

Back

Preview of the front of card 5
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