Cash Flow

• The cash flow statement is a financial statement that shows the inflows and outflows of cash during a specific period of time.
• Cash inflows are the sums of money received by a business during a period of time
• Cash outflows are the sums of money paid by the business during a period of time
• A cash flow cycle shows the stages between paying out cash for labour, materials and so on, and receiving cash from sales of goods.
• Profit is the surplus after total costs have been subtracted from revenue.
• A cash flow forecast is an estimate of future cash inflows and outflows of a business, usually on a monthly basis. It then shows the expected cash balance at the end of each month.
• Net cash flow is the difference, each month, beteween inflows and outflows.
• Closing cash or bank balance is the amount of cash held by the businesses at the end of each month. This becomes the next months opening cash balance.
• Opening cash or bank balance is the amount of cash held by the business at the start of each month.
• Working capital, is the capital available to a business in the short term to pay day - to - day expenses.
• Working capital = current assets - current liablilities