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cash flow

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BTEC First Diploma in Business Unit 3 Investigating Financial Control Introduction: In this assignment i will prepare an annual cash flow forecast using monthly datas and analyse the implications of regular and irregular cash inflows and outflows for a business organisation. I will also evaluate how cash flows and financial recording systems can contribute to managing business finances. Task 1 a A Cash flow relates to the amount of money received and spent in the given period. Cash flow problems occur when the amount spent is greater than the amount received and Cash flow statement is normally produced in a little more detail than the summary statements. A cash flow statement or statement of cash flows is a financial statement that shows how the inflows and outflows affect the business. The cash flow statement is useful in determining the short-term usefulness of a business. It is good if you have to pay bills and Cash flow forecast means preparing a cash flow statement for the future with predicted inflows and outflows. This is always easier to do for an established business because managers have more experience and knowledge on which to base their decision. ...read more.


Task 2 a December and January was the month with regular inflows and outflows because during this time our inflows and outflows didnt change and this is good for our business because we will be able to plan our cash flow. It is better for down 2 u if we have a regular in and outflow because it will be easier for us to plan and predict our cash flows and we will be able to improve our business more better if we have a regular in and outflow. Task 2 b Regular in - and ourflows - This type of inflow is when the business offers customers discounts if they sign up to pay direct debit, which is a regular payment system this make it easier for the business to plan and predict cash flows. Irregular in - and outflows - This is when the business is not getting the same amount of inflow every month or spending differently every month on outflow. If whe have regular inflows and outflows that will be very good for our business because that would mean that we can plan better for our future cash flow. ...read more.


Managment of these factors will help us to be able to plan and predict future cost so that we can be able to manage our costs during the months that we are not selling much. For example * Seasonal Variation if we are able to manage on the month we dont have a lot of customers then we will be able to plan and predict future inflow and outflows, we can do that if we are not spending too much during the season we always not have enaugh customer for example in march and april. What means we should know how t manage our inflows so that the outflows will not be greater than our outflows for that period. * Late credit payment if we are able to manage this problem then we will be able to invest our money on our business because if we manage late credit payment then we will know that we will receive regular payment every month. What means if we dont have late credit payments we will be able to know exactly how much inflows and outflows we have in that month. * Capital expenditure we will be able to manage this by making sure that we invest in things that will bring us more money. ?? ?? ?? ?? Omobolanle Salami 19.05.2009 Assignment No. 03 Down 2 U Phone Page 1 ...read more.

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This essay confuses cash flow with profit and loss. They are different and the reasons for this difference is referred to (seasonal, credit, irregular payments). There should be more discussion of how a business deals with negative cash flow (overdraft, change credit terms etc)

Marked by teacher David Salter 12/02/2012

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