Q&A - What is cash flow?
Wednesday, April 01, 2009
Print
Email
Tweet This!Save to Favorites
Recommend on Google+
Cash flow describes the movements of cash into and out of a business
When you look at the bank statement of any business, you soon realise that cash flow is a dynamic and often unpredictable part of business life. In business, cash is always on the move…
- Cash flows into the bank account when customers pay for their sales, when a loan is received from the bank, interest is received or when assets are sold.
- Cash flows out of the bank account when suppliers are paid, employee wages and salaries are paid; interest is paid to the bank and so on.
You need to be able to distinguish between:
Cash inflows: movements of cash into a business
Cash outflows: movements of cash out of the business
The difference between the cash inflows and cash outflows during a specific period (e.g. a week, month) is known as the “net cash flow”.
The challenge for any business (particularly a start-up) is to ensure that it manages its net cash flow to ensure that it does not run out of money.
blog comments powered by Disqus
Revision Presentation - Improving Cash Flow [18 Jan 2012]
The Business of Football - Everton explain where the money goes [16 Jan 2012]
Revision Quiz - Cash Flow Forecasting for a Startup [12 Oct 2011]
Profits dive and put pressure on liquidity - the Distress Monitor [29 Sep 2011]
Cash flow crisis at Saab: what went wrong? [23 Jun 2011]
Business investment: the UK corporate cash pile [15 Jun 2011]
Lesson Worksheet - Cash Flow Management Basics [5 May 2011]
Toffees in a Sticky Situation [17 Feb 2011]
The end of the line for JJB? [13 Feb 2011]
Cash flow and trade credit - putting the squeeze on suppliers [3 Feb 2011]
Q&A - How is the current ratio calculated and interpreted? [8 Jan 2011]
Q&A - What is the “creditor days” ratio? [8 Jan 2011]
Q&A - How can the debtor days ratio be calculated and interpreted? [8 Jan 2011]
Q&A - How is stock turnover calculated and interpreted? [8 Jan 2011]
Q&A - What factors determine the amount of working capital in a business? [7 Jan 2011]
Q&A - What is “working capital”? [7 Jan 2011]
Cash flow problems put Pontins into administration [13 Nov 2010]
Cash flow Clue-doh! The Mystery is Revealed… [2 Nov 2010]
Cash flow continues to trouble small businesses [25 Aug 2010]
Cashflow-Cluedoh! [10 Aug 2010]
BUSS4 data - what happened to business investment in the UK recession? [14 Jun 2010]
25 Ways to Get The Startup Right [22 Apr 2010]
Cash flow problems persist after the recession [15 Apr 2010]
Recession Survival Strategies Cost UK SMEs £16bn [31 Mar 2010]
Global technology giants are hoarding their cash [26 Mar 2010]
Starter Activity - Cash Flow Forecasting for Celebs [25 Mar 2010]
Strategy in a recession - Don’t Panic Mr Mainwaring! [25 Feb 2010]
Cash management becomes a strategic priority during the recent recession [22 Feb 2010]
UK companies conserve cash in the recession - bad news for shareholders? [8 Feb 2010]
Revision Presentation - Profit and Cash [30 Jan 2010]
Source of finance - SMEs turn to the private alternatives to banks [27 Jan 2010]
Excel AS Teaching Resource: Cash Flow Forecast [16 Jan 2010]
Q&A - Is there an optimal level of gearing? [5 Jan 2010]
Cash flow problems and the business of dying [3 Dec 2009]
Managing Cash Flow - Beware the Economic Recovery [26 Oct 2009]
A Day in the Life - Cash Flow Forecasting [9 Sep 2009]
Workforce planning - getting ready for swine flu [16 Jul 2009]
Small businesses waiting for the upturn [29 Jun 2009]
How not to run a business - the Gordon Ramsay way [31 May 2009]
Q&A - Why are start-ups vulnerable to cash flow problems? [26 May 2009]
Why businesses fail - an interview with Pepita Diamand [24 May 2009]
Q&A - Why is leasing and hire purchase a source of finance? [1 May 2009]
Q&A - Why are trade creditors a source of finance? [1 May 2009]
Cash flow management - chasing the late payers [22 Apr 2009]
Small businesses in the middle of the crunch - insights for students [22 Apr 2009]
Football finances under the spotlight [5 Apr 2009]
Q&A - What is a cash flow forecast? [1 Apr 2009]
Credit Insurance and Retailer Cash Flow [6 Mar 2009]
Cash flow management - dividends in the spotlight [6 Mar 2009]
Update on how 10 small businesses are weathering recession [20 Feb 2009]
More flak for the banks from business customers - what have they done with bail-out cash? [18 Feb 2009]
Businesses counting the cost of the snow [3 Feb 2009]
In a recession - cash is King! [30 Dec 2008]
Small businesses call for cap on credit card costs to ease finance squeeze [30 Dec 2008]
Teaching cash flow management with Cash Flow Clue-Doh! [19 Dec 2008]
Revision Quiz - Improving Cash Flow [26 Oct 2008]
Proposals to help firms with cash flow [19 Oct 2008]
Cash is king for small businesses in the downturn [1 Aug 2008]
SMEs should stand up to the large business bullies [26 Jul 2008]
Cash flow problems could mean its a wrap… [26 Jul 2008]
Credit crunch gets personal for small business owners [2 Apr 2008]
Woolies slashes dividend to conserve cash [2 Apr 2008]
Late payment is strangling the cash flow of small businesses [3 Mar 2008]
BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!
Popular Topic Tags
recession, demand, prices, price, unemployment, profit, economics, costs, investment, inflation, supply, employment, trade, competition, gdp, risk, china, debt, euro, entrepreneur, capacity, production, innovation, downturn, tutor2u, revision, pay, exports, manufacturing, confidence, profits, food, incentives, banks, strategy, globalisation, aqa, expectations, oil, csr, usa, startup, retailers, housing, productivity, sterling, supermarkets, takeover, google, economies of scale, mortgage, cash flow, advertising, quiz, leadership, property, buss4, tesco, economic growth, video, efficiency, enterprise, motivation, stakeholders, apple, deflation, corporate social responsibility, ebea, market share, airlines, pricing, taxation, merger, slowdown, bank of england, acquisition, interest rates, market failure, borrowing, competitiveness, sustainability, product life cycle, credit crunch, budget deficit, aqa business studies, facebook, twitter, aqa business, bbc, nelson thornes, philip allan updates, starbucks, philip allan, monopoly, diversification, recruitment, organic growth, stocks, training, oligopoly, starter activity, shareholders, uk economy, poverty, dollar, emerging markets, government failure, retailing, management, suppliers, buss1, marketing mix, tim harford, cpi, branding, opportunity cost, breakeven, government spending, hodder education, vat, product, customer service, eu, losses, wages, evaluation, india, external growth, wealth, environment, edexcel, location, promotion, technology, information failure, business studies revision, sources of finance, franchise, aqa gce business, elasticity, regulation, spare capacity, welfare, jobs, economic cycle, marketing, zondle, strategic direction, british airways,View all tags for the Business Blog
