Cash flow forecasting and problems (AQA GCSE Business): Flashcards
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Cash flow forecasting definition
Cash flow forecasting definition
Estimates future cash movements into and out of business
Cash inflows
Cash inflows
Money coming into the business
Cash outflows
Cash outflows
Money going out of the business
Net cash flow formula
Net cash flow formula
Cash inflows - Cash outflows
Closing balance formula
Closing balance formula
Net cash flow + Opening balance
Main purpose of cash flow forecasting
Main purpose of cash flow forecasting
Early warning system - spots cash problems before they happen
Key benefit of forecasting cash flow
Key benefit of forecasting cash flow
Identifies potential cash shortages in advance
Low profits & cash flow problems link
Low profits & cash flow problems link
Businesses losing money exhaust cash reserves
Over-investment in capacity issue
Over-investment in capacity issue
Ties up cash in equipment not generating revenue
Excess stock cash flow problem
Excess stock cash flow problem
Ties up cash, risk of obsolescence
Customer credit cash flow issue
Customer credit cash flow issue
Slow-paying customers delay cash receipts
Overtrading definition
Overtrading definition
Expanding too quickly, pressuring short-term finance
PILOTS mnemonic for causes
PILOTS mnemonic for causes
Profits, Investment, Late pay, Overtrading, Too much stock, Seasonal
Most effective cash flow improvement
Most effective cash flow improvement
Cost cutting non-essential expenses
Stock reduction benefit
Stock reduction benefit
Decreases cash tied up in inventory