Alex Lote-Greenfield
Assignment 2
P3- Prepare a 12 month cash flow forecast to enable an
organisation to manage its cash
M1- analyse the cash flow problems a business might
experience
D1- justify actions a business might take when
experiencing cash flow problems.
P3
A cash flow forecast is a detailed estimate of a firm’s future
cash inflows and outflows per month. It does this in five stages:
receipts, payments, net cash flow, opening balance and closing
balance. The cash flow indicates the likely future movement of
cash in and out of the business. It is an estimate of the amount
of money expected to flow in which is referred to as ‘receipts’
and flow out which is referred to as ‘payments’. A forecast
usually covers one year, however it can also cover more short
term periods such as a week or months. A cash flow forecast
shows if a firm needs to borrow, how much, when, and how it
will repay. Cash flow forecasts can help predict upcoming cash
surpluses or deficits and help you make the right decision when
dealing with these. The net cash flow is calculated by just
simply taking away the cash in from the cash out. And then the
closing balance is worked out by adding the net cash flow onto
the opening balance. There are 7 seven stages to a cash flow
forecast.
1. Receipts – the estimate of the money the business is
going to receive each month, according to the demand,
supply and previous sales
2. Inflows – the total money going into the business
generated by sales, and other business activities like rent.
3. Payments – money going out of the business like
payments of the stock and capital expenditure (vans).
Assignment 2
P3- Prepare a 12 month cash flow forecast to enable an
organisation to manage its cash
M1- analyse the cash flow problems a business might
experience
D1- justify actions a business might take when
experiencing cash flow problems.
P3
A cash flow forecast is a detailed estimate of a firm’s future
cash inflows and outflows per month. It does this in five stages:
receipts, payments, net cash flow, opening balance and closing
balance. The cash flow indicates the likely future movement of
cash in and out of the business. It is an estimate of the amount
of money expected to flow in which is referred to as ‘receipts’
and flow out which is referred to as ‘payments’. A forecast
usually covers one year, however it can also cover more short
term periods such as a week or months. A cash flow forecast
shows if a firm needs to borrow, how much, when, and how it
will repay. Cash flow forecasts can help predict upcoming cash
surpluses or deficits and help you make the right decision when
dealing with these. The net cash flow is calculated by just
simply taking away the cash in from the cash out. And then the
closing balance is worked out by adding the net cash flow onto
the opening balance. There are 7 seven stages to a cash flow
forecast.
1. Receipts – the estimate of the money the business is
going to receive each month, according to the demand,
supply and previous sales
2. Inflows – the total money going into the business
generated by sales, and other business activities like rent.
3. Payments – money going out of the business like
payments of the stock and capital expenditure (vans).
