Cash flow forecasts

• A cash flow forecast projects the future cash inflows and outflows of a business.
• Money going out of the business, such as wages or rent, is considered a cash outflow.
• What are the key components of a cash flow forecast?

  Inflows and outflows
• Why do businesses create cash flow forecasts?

  Anticipate funding gaps
• Cash outflows include payments to suppliers, wages, or rent.


  True
• Cash flow forecasts help businesses plan for future cash needs.


  True
• Financing activities in a cash flow forecast may involve borrowing or repaying loans.
• What are the key components of a cash flow forecast format?

  Inflows and outflows
• Match the category with its example:

  Cash Inflows ↔️ Sales

  Cash Outflows ↔️ Wages
• Cash flow forecasts help businesses plan for effective cash management.


  True
• A cash flow forecast helps businesses anticipate potential funding gaps.

  True
• Cash outflows include payments to suppliers, wages, and rent.

  True
• Cash outflows include payments to suppliers, wages, or rent.
• Match the category with its description:

  Cash Inflows ↔️ Money coming into the business

  Cash Outflows ↔️ Money going out of the business
• What is an example of a cash inflow for a business?

  Loans
• What is the purpose of 'Sales Revenue' in a cash flow forecast?

  Projected income from sales
• Steps in creating a cash flow forecast format

  1️⃣ List cash inflows

  2️⃣ List cash outflows

  3️⃣ Calculate net cash flow

  4️⃣ Calculate cumulative cash balance
• What is the difference between cash inflows and cash outflows called?

  Net Cash Flow
• Cash inflows include money coming into the business from sales, loans, or investments
• How is the cumulative cash balance calculated?

  Previous balance + net flow
• Steps to create an effective cash flow forecast

  1️⃣ Gather sales revenue data

  2️⃣ Collect costs of goods sold (COGS)

  3️⃣ Record operating expenses

  4️⃣ Include capital expenditures (CAPEX)

  5️⃣ Factor in financing activities
• Cash inflows include money from sales, loans, or investments
• To project sales revenue, businesses need to understand sales forecasts and consider seasonal trends
• The cost of goods sold (COGS) includes expenses related to producing or acquiring goods for sale
• The net cash flow is calculated by subtracting cash outflows from cash inflows
• What does CAPEX stand for in cash flow management?

  Capital Expenditures
• What is the formula for Net Cash Flow?

  Cash Inflows - Cash Outflows
• Steps in analyzing cash flow trends

  1️⃣ Compare metrics across periods

  2️⃣ Identify patterns

  3️⃣ Anticipate funding needs

  4️⃣ Improve financial planning
• Cash inflows include loans and investments.


  True
• Reliable data is crucial for creating an accurate cash flow forecast.


  True
• A cash flow forecast helps businesses anticipate funding gaps.

  True
• The net cash flow is the difference between cash inflows and cash outflows
• A £20,000 loan with monthly repayments of £1,500 is an example of a cash outflow
• Match the cash outflow category with its example:

  COGS ↔️ Payments to suppliers

  Operating Expenses ↔️ Rent and wages

  CAPEX ↔️ Purchase of a new delivery van

  Financing Activities ↔️ Monthly loan repayments
• Why is analyzing cash flow trends important for a business?

  To improve financial planning
• Cumulative cash balance is calculated by adding net cash flow to the previous balance.


  True
• What is a cash flow forecast?

  Projects future cash inflows
• Give an example of a cash inflow for a business.

  Sales
• What is an example of a cash inflow for a bakery?

  Cake sales
• The purpose of a cash flow forecast is to ensure businesses have enough cash to meet their obligations.

  True