1. Cash flow

2. Cash flow: Key definitions Cash flow is …the flow of money into and out of a business in a given time period. Cash flow is …the flow of money into and out of a business in a given time period. Cash flow forecast – a prediction of how cash will flow through a business over a period of time in the future. Cash flow forecast – a prediction of how cash will flow through a business over a period of time in the future.

3. Now for a business’ cash flow.. JanFebMar Receipts506065 Expenses404550 Net cash flow Opening balance 30 Closing balance

4. Now for a business’ cash flow.. JanFebMar Receipts506065 Expenses404550 Net cash flow 10 Opening balance 3040 Closing balance 40

5. Now for a business’ cash flow.. JanFebMar Receipts506065 Expenses404550 Net cash flow 1015 Opening balance 304055 Closing balance 4055

6. Now for a business’ cash flow.. JanFebMar Receipts506065 Expenses404550 Net cash flow 101515 Opening balance 304055 Closing balance 405570

7. Ways of improving cash flow Speed up / increase inflows eg Speed up / increase inflows eg Slow down / reduce outflows eg Slow down / reduce outflows eg Seek new sources of finance Seek new sources of finance

8. Cash flow forecasts are useful for: Cash flow forecasts are useful for: Planning – problems can be identified and tackled in advancePlanning – problems can be identified and tackled in advance The bank – needs this before finance is offered (eg loans/ overdrafts)The bank – needs this before finance is offered (eg loans/ overdrafts) Gaining grantsGaining grants BUT may not be accurate because…..BUT may not be accurate because…..

9. Cash flow v profit Cash flow is NOT the same as profit Cash flow is NOT the same as profit A company may be cash rich but unprofitable. Explain. A company may be cash rich but unprofitable. Explain. A company may be profitable but go out of business. Explain. A company may be profitable but go out of business. Explain.