JUNIOR CYCLE BUSINESS STUDIES Net cash = total receipts (A) – total payments (B)
Businesses often use spreadsheet software, such as Microsoft Excel, to complete their cash flow forecasts.
Answer the following questions based on Riverview Ltd’s cash flow forecast.
1. Do you think this cash flow forecast is positive or negative? 2. Do you think a lender would be likely to award a loan based on this information?
3. Can you identify any problems in this cash flow forecast? 4. Could you offer any solution to the problem?
Cash flow forecasts A
Go to page 117 of your Activities and Accounts Book to practise preparing and analysing cash flow forecasts.
CHAPTER SUMMARY
• A short written statement of a business’s overall or main goal is known as its mission statement. • A business plan describes a business, what it offers, its market, its fixed assets and its finances.
• A fixed asset is any property that a business owns that is not easily sold or turned into cash, such as premises, vehicles and machinery.
• Debtors are the people who owe a business money. Creditors are the people the business owes money to.
• A cash flow forecast predicts a business’s receipts (money in) and payments (money out) over a period of time.
• The money available to a business for day-to-day use is called working capital. • Liquidity is the ability of a business to meet its short-term debts.
Taking stock A
Go to page 122 of your Activities and Accounts Book to check what you have learned in chapter 18.
