Task 1 b
Our cash flow is showing us that we had a positive cash flow from september till january because of the christmas sales and from february till may we have a negative cash flow, but from june till august we have a positive cash flow because of the summer sales.
Positive cash flow: For a positive cash flow, the inflwos must be grater than the outflows
Negative cash flow: is when the outflows are greater than the inflows.
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.
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.
Task 2 c
Down 2 u will be affected if the inflows and outflows are irregular because we will not know how much we would receive for the month and we will not be able to plan for our income for the next comin month. And it can also put our business in debits because if we dont make any profit or dont have our breakeven then we will not be able to pay for our stock and other payments that we have to pay every month. But if our inflows and outflows are regular it will not affect our business because we will exactly know how much we will make in the month and in some other month aswell and we can plan for the future form our business.
Task 3
In this task i should make references for:
-
Seasonal variation: This will affect our business because in every season we generate a different cash inflow and outflow. For example, in summer and winter we will have to spend more on outflows because during these season there is a high demand of stock because of sales and that will also mean that we will make more profit than in spring and autumn, but if we make enaugh profit in summer and winter we can cover our cost with it.
-
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 money and that would mean that we will be shot of cash. This will also affect us to plan for our future cash flows because some customer wont be paying on right time of which would live us with problem, because that would mean that we will not have enaugh money to upgrade our store.
-
Capital expenditure This is spending on large items which are expected to last for some time. This would affect us because we would be invest large amounts of money on the business. For example, if we want to make our business bigger, new staff members and new new uniform for our them. 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 used to pland and predict future cash flows of our business, this also helps us to see wheter we are losing or gaining money or wheter we are spending to much money, by shwoing this we will be able to fix problems and helps us to save money. Cash flow also allows us to know if we are able to invest on our business.
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.
-
Late credit payment if we are able to manage this problem then we will be able to invest our money on our business because of we manage late credit payment then we will know that we will receive regular payment every month
-
Capital expenditure if we are ablte to manage this by making sure that we invest in things that will bring us money.