Cash Flow Forecasting. Lesson objectives Understand what cash flow is and be able to produce a cash flow forecast Learning outcomes To be able to describe.

Slides:

Advertisements

Similar presentations

Cash Flow Forecasts.

Advertisements

National 4/5 Business Management

CASH FLOW FORECASTS Part 10. Starter What is a Cash flow? Why do we use them?

Chapter 11 – Forecasting and Short-Term Financial Planning  Learning Objectives  Understand how sales forecasts are used to predict cash inflow  Understand.

Forecasting Cash Flows

Question Answer Accounting I Debits & Credits Analyzing.

Financial planning.  Like any preparation for the future, a business has to make assumptions and estimates about the months ahead.  Income and spending.

Managing Finance and Budgets

Financial Aspects of a Business Plan

Forecasting of cash flows. On completing this chapter, you will be able to:  Understand the importance of cash to business.  Explain the difference.

3. 20 Using a cashflow forecast Using a cashflow forecast What is ‘cashflow’?  The flows of money into and out of the business  Money flows in.

AS Business Studies Business Accounting

GCSE Business StudiesCash flow Cash Flow and Cash Flow Forecasts Click here for Part 1 Click here for Part 2.

Unit 2: Measuring Financial Health. Learning Objectives O Define asset, liability, and net worth. O Calculate the level of net worth using a balance sheet.

Cash-flow Aim: Explain how a cash flow works Objectives: 1.Identify what makes-up a cash-flow 2.Be able to work out relevant cash flow calculations 3.Analyse.

Cash Flow Forecasting.

Financial Statements Business Management.

Cash flow planning Unit 8.

Business Section: FinanceFurther Reading C.29 Keywords – cash flow, forecast, inflows, outflows, liquid, net cash flow. Class : Y11 Lesson Topic: Finance.

FINANCIAL RESOURCES MANAGEMENT

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-1 Understanding Cash Flow Analysis.

Cash Flow. Lesson Objectives By the end of the lesson you should be able to:  Explain the advantages and disadvantages of cash flow forecasts.  Identify.

C ASH - FLOW F ORECASTS Objective Prepare cash flow fore cast from given information.

IB Business and Management

Accounts & Finance Working Capital. Learning Objectives Define working capital and explain the working capital cycle Prepare a cash flow forecast from.

IB Business and Management

Accounting for Executives Week 6 15/4/2010 (Fri) Lecture 6.

Mr Stokes. To understand the meaning of cash flow To understand why cash flow is important to a business To be able to construct & interpret a cash flow.

1 Calculating the profit or loss of a business. * Profit (what it is and why it matters) * Purpose and main elements of profit/ loss account All students….

Using Cash Flow Forecasting

Lim Sei cK.  Cash flow describes the movements of cash into and out of a business  When you look at the bank statement of any business, you soon.

Unit 5 – Business Accounting

FINANCIAL STATEMENTS Business Management. Today’s Objectives  Interpret basic financial statements, including cash flow, income statement, and a balance.

Understanding Business Cash Flow. About the SBDC Eighteen Centers in Pennsylvania More than 1,000 Centers Nationwide The SBDC network.

Look at the following infographic

POB 4.01 PARTS 1 & Understand financial planning.

IGCSE Business Studies Cash Flow. What is meant by cash flow? Cash flow is the flow of cash in and out of a business, over a period of time. Cash inflows.

1 Using a cashflow forecast L/O: demonstrate an understanding of cash flow.

CASH FLOW PLANNING UNIT 8. THIS UNIT WILL EXPLAIN THE IMPORTANCE OF CASH FLOW TO BUSINESS OPERATIONS HOW FIRMS CAN RUN SHORT OF CASH AND THE LIKELY CONSEQUENCES.

Starter QUICK QUESTIONS Complete the following quick questions in your workbooks. Indicate how sure you are, using the following system I am sure this.

FINANCIAL PLANNING Notes. Financial Planning in Business Financial questions never go away… Beginning a Business Where will you get the money? How much.

Lim Sei cK.  Cash flow describes the movements of cash into and out of a business  When you look at the bank statement of any business, you soon.

Management of Working Capital. Balance Sheet A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific.

Liquidity 2 lessons covering liquidity. We will look at: a)What is meant by liquidity, measuring and calculating: – Current ratio – Acid test b)Ways to.

Cash flow Business Cash inflow £££££££ Cash Outflow.

Forecasting Cash Flows Forecasting Cash Flows. Cash flow is important Cash flow is a dynamic and unpredictable part of life for a start-up or small business.

Cash Flow Forecasting. STARTER Think about the bill payer in your household. What things need to be paid each month? How are those bills paid for?

Cash Flow – the sum of CASH payments into a business less the sum of CASH payments out Liquidation - when a firm ceases trading and its assets are sold.

Answer of ch 2 Cash flow. E12-2 Understanding the Computation of Cash Flows from Operating Activities (Indirect Method) Suppose your company sells services.

Cash budgeting. What is a budget?   An agreed plan of action for a period of time   A financial plan shown in monetary terms   Sets out financial.

Chapter 36 Financing the Business Section 36.1 Preparing Financial Documents Section 36.2 Financial Aspect of a Business Plan Section 36.1 Preparing Financial.

Edexcel GCSE Business Studies © Pearson Education 2009 Chapter 16 Key terms Reveal the key term by clicking the forward arrow on your keyboard. Cash Cash.

Section 8 - Bromley Furnishings. Lesson objectives To be able to calculate, interpret and analyse cash flow forecasts To be able to recommend methods.

FINANCIAL RESOURCES MANAGEMENT

Cash Flow Forecasting & Statements.  By the end of the lesson…  All students will be able to describe what cash flow is (Grade C)  Most students will.

National 4/5 Business Management

Financial Statements Business Management.

Lesson Objectives All students will understand Most students will

CASH-FLOW FORECAST.

Income Statements Chapter 23.

© Inge Hill, Start Up, Palgrave 2015

Chapter 26 – Cambridge Tutorial

1.1 Financial Records BST.

TOPIC 3 EFFECTIVE FINANCIAL MANAGEMENT

Topics Covered Business Costs Revenue Profit Expenditure

Topics Covered Business Costs Revenue Profit Expenditure

Cash Flow Forecasting.

Financial Statements Decision-making usefulness

Presentation transcript:

Cash Flow Forecasting

Lesson objectives Understand what cash flow is and be able to produce a cash flow forecast Learning outcomes To be able to describe cash flow forecast (E) To accurately construct a cash flow forecast (C) To evaluate the importance of cash flow for a business (A)

So what is Cash flow? Cash flow is the flow of money into and out of a business. Cash flow is used to work out if a business has enough cash coming in on a day to day basis in order to cover the cash it must pay out.

So what is Cash flow? £ £ Where does cash come from? What would a business spend cash on?

Net cash flow is easy to work out! NET CASH FLOW Cash inCash out We call these Inflows! We call these Outflows!

Problems with poor cash flow If there is not enough cash, suppliers may not get paid. Staff too, and they may be unmotivated and feel resentment. Creditors may insist on stricter terms in the future or take legal action.

Does it help? Businesses can produce a cash flow forecast to anticipate any problems The business can predict and react to these potential issues They will still need to be careful in case of any unexpected cash flows

Cash flow forecast Need to plan enough cash to survive Cash flow forecast helps plan flows in & out £JanFebMarAprMay Inflows Outflows Net Cash flow Opening Balance Closing Balance Cash at start of month Cash at end of month Closing Balance = Opening Balance + Net Cash Flow Inflows - Outflows

Inflows What inflows might a business have? How can we calculate our business inflows?

Outflows What outflows would we have to consider in a business? – Rent – Equipment and supplies – Running Costs (E.g Utility bills such as heating) – Wages

Break Even Point The Break Even Point is when INFLOWS = OUTFLOWS

Cash Flow Case Study Cash Flow Forecast Using the given figures, complete the cash flow forecast for the company opening in January and assume the January opening balance is 0.

Role Play 1.Get into groups of 3. 2.You will be operating as a small business. 3.Each business will start with a set amount of money (all different) which will be your opening balance 4.Using paper provided spend 5 minutes creating a product which you will sell. You must transform the paper into a product before being able to trade it. 5.You will then have 2 minutes to trade. 6.Record your income and expenditure over this time so make sure you are keeping track of what you have bought and sold. 7.Each member of the group should complete a cash flow. 8.In the next 2 minutes you will be trading any remaining stock you have along with what you have purchased. We will repeat this until we finish our cash flow forecast in the fourth month.

Plenary: Evaluation What went well for your business? Did you manage to keep track of your cash flow? Did you ever encounter financial difficulty? How could you have improved the cash flow of your business? Were the businesses who started with more cash the ones who ended up with the most at the end? Can you explain why this may have happened?