Cash Flow Statement and Cash Flow forecast Definitions

Cash Flow Statement and Cash Flow forecast

Definitions 1) a Cash Flow Statement tells us the cash inflows and outflows in a business over a period of time 2) A Cash Flow Forecast is an estimate, made by the business, of the cash it expects to receive over a period (the inflow) and what it expects to spend over that same period (the cash outflow).

Why Prepare and Examine Cash Flow Statements? 1) Because a business should always compare its actual cash flow with its predicted cash flow. 2) We can look at a cash flow forecast on its own This is used to tell us if the business is likely to have enough money coming into the firm to pay all of its expenses.

What Cash Flow Includes: • • Revenue Expenses Net Cash Flow Balances

Cash Flow => is not an indication of Profitability Please discuss this statement in pair

Your answer could be A cash flow statement does not show the profitability of a company, only a Profit and Loss Account shows how much profit a business is making.

Cash Flow shows:

Cash Flow shows:

Cash Flow shows:

Activity Think about other businesses which may have fluctuations between incomes and expenditures Explain what might cause these fluctuations For this activity works in pair and record your answer

Activity List measures that a company like Mowlem or WH Smith can take to ensure that there is cash available every month.

Other Activities Please access i-learn and complete the activities there. When you have finished please create an eportfolio for your Enterprise Activity and as a template you may want to download a cash Flow template from the Enterprise unit on i-learn and post it in your group e-portfolio so you can complete the document as and when you have the relevant information: potential revenues and costs