Cash flow (AQA GCSE Business): Flashcards
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Cash flow definition
Cash flow definition
Movement of money in and out of a business over time
Key difference: cash flow vs profit
Key difference: cash flow vs profit
Timing - profit recorded immediately, cash received later
30 day credit sale impact
30 day credit sale impact
Profit recorded immediately, cash arrives in 1 month
Why profitable businesses can fail
Why profitable businesses can fail
Not enough cash to pay immediate bills
Cash inflows definition
Cash inflows definition
All money coming into the business
Cash outflows definition
Cash outflows definition
All money leaving the business
Net cash flow formula
Net cash flow formula
Cash Inflows - Cash Outflows
Examples of cash inflows
Examples of cash inflows
Sales, receipts, loans, grants, asset sales, investments
Examples of cash outflows
Examples of cash outflows
Wages, suppliers, equipment, interest, dividends, taxes
Two main causes of cash flow problems
Two main causes of cash flow problems
Money not coming in fast enough OR too much leaving too fast
Consequence of running out of cash
Consequence of running out of cash
Forced into bankruptcy, even if profitable
Benefits of positive cash flow
Benefits of positive cash flow
Build reserves for safety net and future investment