Financial Performance Analysis (AQA A-Level Business): Flashcards
📚Flashcards
Practise the cards
10 cards from this deck
ShowHide
Practise the cards
10 cards from this deck
Cash flow
Cash flow
Movement of money into and out of a business
Payables (trade creditors)
Payables (trade creditors)
Amounts business owes to suppliers for goods/services on credit
Receivables (trade debtors)
Receivables (trade debtors)
Amounts owed to business by customers who bought on credit
Memory aid: Payables vs Receivables
Memory aid: Payables vs Receivables
Payables = you PAY out; Receivables = you RECEIVE money in
Cash-flow forecast
Cash-flow forecast
Estimates future cash inflows & outflows over a period (12 mths)
Why can timing matter more than profitability?
Why can timing matter more than profitability?
Business can be profitable but fail if can't pay immediate bills
Historical data
Historical data
Shows what has actually happened in the past
Forecast data
Forecast data
Based on predictions about future performance
One reason to analyse cash flow timing
One reason to analyse cash flow timing
Predict periods when outflows exceed inflows (forecast shortfalls)
Why treat financial data with caution?
Why treat financial data with caution?
All data has limitations & may not predict future accurately