Chapter 27 Business- Forecasting cash flows

Question	Answer
Cash flow	The sum of cash payments to a business (inflows) - the sum of cash payments (outflows)
Liquidation	When a firm ceases trading and its assets are sold for cash to pay suppliers
Insolvent	When a business cannot meet its short-term debts
Cash inflows	Payments in cash received by a business, such as those from customers (debtors) or from the bank e.g receiving a loan
Cash outflows	Payments in cash made by a business, such as those to suppliers and workers
Debtors	Customers who have bought products on credit will pay cash at an agreed date in the future
Cash-flow forecast	Estimate of a firm's cash inflows and outflows
Net monthly cash flow	Estimated difference between monthly cash inflows and outflows
Opening cash balance	Cash held by the business at the start of the month
Closing cash balance	Cash held at the end of the month becomes
Credit control	Monitoring of debts to ensure that credit peroids are not exceeded
Bad debt	Unpaid customers' bills that are now very unlikely to ever be paid
Overtrading	Expanding a business rapidly without obtaining all of the necessary finance so that a cash flow shortage develops
Creditors	Suppliers who have agreed to supply products and who have not yet been paid

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	Created by Chuka Munkh-Achit over 8 years ago