• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Why Businesses Use Cash Flows

Extracts from this document...

Introduction

The Usefulness of Cash Flow Forecasts Cash flow forecasts are important to businesses because it allows them to foresee how much capital they should have in a bank at any particular time of the year. They can achieve this by adding to an inventory all their expected cash inflows and to that adding up its cash outflows. The variation between the two is called the cash outflow and this is the amount the business expects to pay to other companies or individuals. ...read more.

Middle

Implications of Regular and Irregular Cash Flows In business the inflow and outflow of money is not always consistent. On some days a business can receive huge payments while on others they may find themselves having to pay-out large sums to businesses. All businesses much prefer a steady stream of payments because it allows them to easily plan and predict the future cash flow of the business. The implications of a regular cash inflow for BigC Productions is that they will have a consistent level of income every month which means they can pay their bills and plan for future purchases successfully. ...read more.

Conclusion

The irregular outflow means that they would spend a huge amount in the month of April which severally lowers their closing bank balance meaning that they are struggling to pay their bills for the following months until they receive a large payment in August. The regular outflow that they have means that they are better able to plan for each month's payments. Although they could also get in contact with the local council and ask that they spread out their Rates payment to a monthly fee instead of once per year which will allow them to pay it off in a more even level. ?? ?? ?? ?? ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. annual cash flow forecast

    This would be a big outflow because there would be more money going out than coming in. This could lead us in to debits or short of cash. Cash flows contriburtes to our finances because it helps us to see if we had a positive month because this could be

  2. Complete Report on Askari Commercial Bank

    Without the proper introduction, the new account cannot be opened. The bank officer consider following precaution in this respect. * The introducer should come with the prospective customer to the bank, so there will be no doubt about the identity of customer.

  1. What does Finance involve.

    Total estimate: �1494.50 Above are my basis stock cost, I have kept an extra bought of �500 incase I need to add on to my list. As you can see above I have researched about to different companies' wholesale price to make sure I am saving the maximum amount of

  2. Preparation of a cash flow forecast

    following months the cash flow was positive, this means if the business continues like that it will run effectively. Situation 4 January February March April May June Inflow Sales �3,500.00 �4,000.00 �4,500.00 �5,000.00 �2,500.00 �6,000.00 Total inflow �3,500.00 �4,000.00 �4,500.00 �5,000.00 �2,500.00 �6,000.00 Wages �1,000.00 �1,000.00 �1,000.00 �1,000.00 �1,000.00 �1,000.00

  1. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    Payment Protection Insurance - this is an insurance that will cover your monthly loan repayments in the case of unemployment, accident, sickness or death. There are sometimes different levels of insurance providing different cover so it is important to check the small print to ensure the cover provided is suitable for Jamie needs.

  2. Management Accounting Report.

    than the normal ones and in that way the hotel can not complain because the company can explain that is the quality for how mach they are paying for. 4. Another thing that might work is that the company should allow discount to all the customers that are willing to buy 400 food mixers or more.

  1. Responsible accounting is the ability to conduct business in a way that is not ...

    Thus, beginning inventory has no share of the materials cost for this month ($360,000). The ending inventory is 100% complete as to materials this month. Therefore, each unit of ending inventory has the same material cost as a unit that was completely manufactured this month.

  2. Describe the following features of their two chosen businesses.

    Every thing i.e. financial documents are all secret. However there are many disadvantages these include long working hours. Another reason is that there is difficulty to raise a capita. Also if any thing goes wrong then you could lose everything (an unlimited liability business).

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work