This week we will look at the business tool cash-flow forecasting. You will need to know:
- What the purpose of a cash-flow forecast is - identifying the money that should be coming into the business (inflows) and the money going out of the business (outflows) over a period of time,
- Be able to identify inflows and outflows
- Be able to explain the purpose of a cash-flow forecast and how it identifies the flow of cash through an business over a period of time
- Understand the sources of cash coming into the business (inflows)
- Understand the sources and destination of cash leaving the business (outflows)
- Identify the timings of inflows and outflows
- Understand the benefits of using cash-flow forecasts to plan for success in a business (e.g. to produce new goods and services, invest in new resources, expand / reduce activities) and explain the associated risks to businesses of not completing a cash flow forecast.
- Compare a cash flow forecast from given information, showing individual and total inflows, individual and total outflows, net inflows and outflows and opening and closing balances.
- Analyse a business' finances based on cash-flow information and identify possible issues for the business from any cash surplus or deficit