Other
Unit 3- Personal and Business finance ALL CONTEnt
- Course
- Institution
All content notes of Unit 3 BTEC BUSINESS Pearson. Provides all learning aims from a to f. I’m a distinction student in this course.
[Show more]
Seller
Follow
rubeemc
Content preview
BTEC level 3 national extended business studies | Unit 3Rubee McEnaney-Cox
Learning aim E: cash flow and break even
Cash flow: the amount of money flowing into and out of a business over a period
of time.
Cash inflows: Receipts of cash into the business
Examples: Cash sales, Credit sales, Loans, Capital Introduced, Sale of an asset, Bank
Interest received, Grants, Inflow from debt factoring
Cash outflows: Payments of cash from a purchase
Example: Cash purchase, Credit purchase e.g. inventory from suppliers, Purchase of
an asset, VAT, Bank interest paid, Rent, Rates, Salaries, Wages, Utilities
Cash flow forecast: document that shows the predicted flow of cash into and out of
a business over a given time. Normally 12 months.
Cash-flow statements: describe what actually happened in the past to inform managers, owners and investors.
Negative bank balance is often said to have liquidity problems and is in danger of becoming insolvent
Liquidity: measures a business’ ability to meet short-term cash payments
Insolvent: when a business is unable to meet short-term cash payments
Cash flow timings:
Trade Receivables – owe the business money
Receivables are also known as debtors.
Trade Payables – owed money by the business
Payments are also known as creditors.
Why do businesses forecast cash flow?
-Potential cash flow problems in advance
-Helps make sure there is sufficient cash available to make payments
-Providing evidence for financial assistance
-Identifies if the business is holding too much cash
Factors affecting cash flow:
-Amount of cash invested into the firm and held at the start of trading
-Time taken to produce the product/service by converting inputs into outputs
-The amount of inventory held by a firm
-Goods sold on credit
-The amount of credit given by suppliers
-Seasonality
Methods of improving cash flow problems
-Increasing sales
-Increasing unit price
-Negotiate better payment terms with suppliers
-Overdrafts
-Selling off stock at sale price
-Leasing some of its assets
Problems with cash flow forecasting?
-Changes in the economy
-Changes in consumer tastes
-Inaccurate market research
-Competition
-Uncertainty
1
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller rubeemc. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.68. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53022 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now