Flashcards in 1.3.3 - Cash and Cash Flow Deck (12)
The amount of money that a financial institution or supplier will allow a business to use, which it must pay back in the future at an agreed time
Fixed costs that come from running and office. Shop or factory, which are not affected by the number of specific products or services that are sold
Insolvent: A business that is unable to pay its debts and/ or owes more money than it is owed
Items that get 'used up', such as pens, paper, staples and other items that a business has to replace regularly
Equation Net cash flow
Net cash flow = Cash inflow - Cashg outflow
Cash flow forecasting
Refers to the prediction fo cash coming in and moving out of a business.
Equation Closing balance
Opening balance + net cash flow
Equation Opening Balance
Opening balance = Closing balance in preceeding month.
-Refers to money coming into the business
- Eg Government grants, or sales.
-Refers to the outgoings of the business,
- e.g. Payment of wages, rawmaterals and utility bills.
A business is solvent when it has ufficient cash oto repay its bills.