Cash/cash-flow

• What topic is covered in this lesson?

  Cash and cash flow
• Why is cash important to a business?

  To pay suppliers and prevent failures
• What is the difference between cash and profit?

  Cash is money available; profit is leftover
• What does a cash flow forecast identify?

  When a firm might need an overdraft
• What does cash pay for in a business?

  Expenses like stock, employees, and rent
• What happens if a business runs out of cash?

  It may become insolvent and cease trading
• What is insolvency?

  Inability to pay debts as they fall due
• What is cash flow?

  Money coming in and going out of a business
• What does positive cash flow indicate?

  More money coming in than going out
• What is cash inflow?

  Money coming into a business
• What are cash outflows?

  All cash that goes out of a business
• What is net cash flow?

  Difference between cash inflow and outflow
• What is the formula for net cash flow?

  Cash receipts minus cash payments
• What are operating activities in cash flow?

  Cash generated and used by business operations
• What are financing activities in cash flow?

  Cash received through debt agreements
• What are investment activities in cash flow?

  Cash received from or used for investments
• What is an opening balance?

  Balance at the beginning of an accounting period
• What is a closing balance?

  Amount remaining at the end of an accounting period
• What is a cash flow forecast?

  Prediction of cash expected in and out
• What is the primary purpose of a cash flow forecast?

  To plan for cash flow deficits
• How can cash flow forecasts help businesses?

  Identify overspending and support sales planning
• What should be done with cash flow forecasts over time?

  They should be updated regularly
• How does a cash flow forecast help in business planning?

  It identifies periods needing financial support
• What is the significance of cash flow peaks and troughs?

  They indicate cash availability at different times
• What should you comment on after watching the video?

  Three cash inflows and outflows
• Why is cash important for a business?

  It allows payment of debts and expenses
• What is the cash flow forecast duration typically prepared for?

  Generally for a period of 12 months
• What should a business do if predicting cash flow for 12 months is tricky?

  Focus on a shorter time period like three months
• How does cash flow forecasting contribute to business growth?

  It helps plan for major expenditures and investments
• What happens to the closing balance of one month?

  It becomes the opening balance of the next month
• How can cash flow forecasts help identify areas of overspending?

  By providing detailed insights into cash movements
• What is the relationship between cash inflows and outflows?

  Inflows should exceed outflows for profit
• What is the significance of cash flow in business operations?

  It ensures smooth running of business activities
• What does a high positive cash flow allow a business to do?

  Make new investments and hire employees
• How does cash flow forecasting assist in managing unexpected costs?

  It helps predict when additional funds may be needed
• What should you do after watching the video?

  Comment on key points discussed
• Why is it important to understand cash flow forecasts?

  To manage business finances effectively
• How does cash flow forecasting relate to business sustainability?

  It helps ensure ongoing financial health
• What is the role of cash in business operations?

  It facilitates payments for essential expenses
• What is the common saying about cash?

  Cash is king