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Evaluate how Cash flow forecasts, Break even charts, Profit & Loss statements and Financial recording systems can contribute to managing business finances Distinction

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Introduction

Evaluate how Cash flow forecasts, Break even charts, Profit & Loss statements and Financial recording systems can contribute to managing business finances -Distinction Introduction Financial control is a vital part of any business. If you lose control it will almost certainly result in your business spiraling into bankruptcy. A wise way to avoid this is to simply record your past cash flows, your current patterns and use the information to construct documents I will explain in detail. These can all be made simply by keeping the required information. Do not forget that all of the information from each document cannot tell you exactly how your company will perform in the future, but it can give you a good guide. I will also include relevant pictures to show what these documents should look like. Cash Flow Forecasts Cash flow forecasts are a great way to estimate how your company will perform in the future. They are the standard way to find where your business will peak and trough in its revenues. ...read more.

Middle

Microsoft Excel also has a feature where you can make a break even chart on the computer, which can have less human error in comparison to hand drawn charts. Advantages of break even charts include being able to check many situations before you decide a strategy, to be able to have a visual way to identify your costs and revenues. This will be able to let you put 'cost-based pricing' in place, which essentially means that you can price your products around your costs, so you can work out the best way to receive maximum profit. These charts are limited though, since they can only predict. Sometimes you have to check that the situation is feasible, since the break even charts may give you an impossible situation where you cannot sell the amount you need to break even. Also do not forget more variables are always around, so leave a margin of error and do not leave break even charts as your only source of advice. ...read more.

Conclusion

They are, meanwhile, limited to the information they supply and they will almost always need to be backed up with more information as proof, since the document is so short. Other Financial Recording Systems Most financial recording systems will help you find sources of financial problems, allow you to control your credit and predicting situations where cash is vital so you can leave a margin of safety (For example, you must make sure you have enough money to start up your business otherwise you will be in the red instantly, which will have a bad effect from the start). Other financial recording systems include the balance sheet, which helps the company show its financial position at any time. This can be helpful if the business needs to find information at a single point in time. It is the only one of the documents mentioned that can do this. All financial recording systems will generally benefit your company if you construct them correctly, since most are a good way of predicting what is to come for your business and how you can prepare. ?? ?? ?? ?? Bryn Roberts 11L ...read more.

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Here's what a teacher thought of this essay

3 star(s)

The writer makes some factual errors and too many sweeping statements. They mix up forecasts and statements i.e. a forecast is a prediction and a statement is what actually happened. Both are useful to a business in different contexts.

Marked by teacher David Salter 07/02/2012

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