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GCSE Business Studies
Cashflow
Beauchamps High School
Cash Flow
Beauchamps High School
Theory
Notes
The flow of cash into and out of a
business
Inflows
Beauchamps High School
Theory
Notes
Cash flowing into a business, its receipts
outflows
Beauchamps High School
Theory
Notes
Cash flowing out of a business, its payments
Cash flow
InflowsOwn money invested in businessBank loanCash from sales
OutflowsWagesEquipmentTelephone, gas, electricity and other billsInterest on loanAdvertising
Beauchamps High School
Theory
Notes
Net Cash Flow
This is the money left over when a business takes its outflows from its inflows.
Receipts of a business minus its payments
For example: If Cadbury have:
£30,000 per month coming in
pay out £10,000 in costs
NET CASH FLOW is £20,000
Beauchamps High School
Theory
Notes
The importance of Cash flow
Businesses cannot survive without cash
Completely running out of cash will mean the business will fail
Beauchamps High School
Theory
Notes
Cash Flow is not the same as Profit
A business still fail (bankrupt) even though books show a profit
How is this?
Because of poor cashflow!!
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Against the Clock
Cash Flow Forecast
Beauchamps High School
Theory
Notes
Prediction of how cash will flow
through a business in a period of time
Cash flow forecast
Its used to see:
How well they should be performingIf action needs to be taken to avoid a
cash crisisHelp apply for/secure loans from the
bank
Beauchamps High School
Theory
Notes
Cash flow forecast
Opening balanceAmount of money in a business at the
start of the month
Closing balanceAmount of money in a business at the
end of a month
Beauchamps High School
Theory
Notes
Review homework – Anna Mull the gardener
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What affects Cash flow?
Sales can change
Costs can change
Credit terms can change
Stock levels can change
Beauchamps High School
Theory
Notes
The Business Plan
Beauchamps High School
Theory
Notes
A plan for the development of a business giving
forecasts of items such as sales, costs and cash
flow
Purpose of a business plan
Gets owners to think about all aspects of their business, including financial calculations
Help bank manager and investors to see if the business stands a chance of being successful
Beauchamps High School
Theory
Notes
Contents of a business plan
Name of the business and brief outline of what the business is
Who are the main competitors likely to be?
What equipment is needed and costs
Premises needed
Suppliers to the business
Key personnel and job roles
Production methods used
Marketing
Total costs and revenues
Cash flow for first 12 months
Sources of finance for the start-up
Beauchamps High School
Theory
Notes
Homework task
Beauchamps High School
