• 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. Complete Report on Askari Commercial Bank

    Partnership Firm Account The documents required for these accounts are: * Account Opening Form * SS Card * Copy of NIC of all Partners * Copy of registration certificate * Copy of partnership Deed The partnership accounts are opened under the following conditions: * Partnership firms can open only current account due to business concern.

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

    Increased purchasing power * Improved supplier relationships * Optimised stock levels * Achieve growth without increasing capital or parting with equity Many banks restrict these services to larger clients. Bank of Scotland has a Small Business Unit set up to serve small businesses, sole traders and partnerships with turnovers below �350,000.

  1. What does Finance involve.

    They are more suitable for my service. Relax massage oil 3 big bottles � 7.00 each bottle �21.00 www.purelyu.com This was the only company I found that sailed this oil so I could not compare the price with other companies.

  2. annual cash flow forecast

    * Late credit payments: This means that customers are allowed to pay for goods a few weeks after they have received them. This would affect us because if the customer make late payments we will lose large amounts of

  1. Preparation of a cash flow forecast

    outflows �2,100 �4,350.00 �4,600.00 �4,850.00 �5,100.00 �5,350.00 Net cash flow �900.00 -�350.00 -�100.00 �150.00 �400.00 �650.00 Opening balance �5,000.00 �5,900.00 �5,550.00 �5,450.00 �5,600.00 �6,000.00 closing balance �5,900.00 -�5,550.00 �5,450.00 �5,600.00 �6,000.00 �6,650.00 Although the rent is reduced to �1,500 Wooden Wonders have to pay �1,000 wages.

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

    Partnership In a partnership you can have form 2 to 20 people this may mean that there might not be equal shares in the business. There are many advantages for a partnership these include more skills, another is that it is easier to raise money because there is more than one of you(capita)

  1. Business Plan for Internet Caf

    1.3 Legal Structure of the business UIC is a sole trade company that is that owner David Chen is the only person who runs or is in charge of the place. 1.4 Keys to success * The design and the products of UIC will be different from all the other cafes and net cafes in the local district.

  2. Management Accounting Report.

    not looked at the advantages and disadvantages of that serious decision that he wants to make. Method of investigation (Part two of Marginal costing) To convince the managing director we need to use: 1. Table 2. Calculation Findings (Part two of Marginal costing)

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