Cash Flow Statement CMD

848 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
848
On SlideShare
0
From Embeds
0
Number of Embeds
69
Actions
Shares
0
Downloads
20
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Cash Flow Statement CMD

  1. 1. The Cash Flow Statement Higher/Int 2 Business Management 2009-2010
  2. 2. The Cash Flow Statement <ul><li>A Cash Flow Statement is produced by an organisation in addition to the Trading Profit and Loss Account and Balance Sheet . </li></ul><ul><li>This statement shows movements of cash over the past year . </li></ul>
  3. 3. Cash Management <ul><li>Poor cash management is the second most popular reason for business failure . </li></ul><ul><li>The concept of cash flow is centered around liquidity - the ability to maintain sufficient liquid assets to meet day to day commitments . </li></ul>
  4. 4. Cash Management <ul><li>Most businesses fail , because they run out of cash and not because they lack success or profits . </li></ul><ul><li>A Cash Flow Statement provides an easy means by which to track the movements of cash . </li></ul>
  5. 5. Terms <ul><li>Cash Inflow: </li></ul><ul><ul><li>a movement of cash into the business e.g. cash sales. </li></ul></ul><ul><li>Cash Outflow: </li></ul><ul><ul><li>a movement of cash out of the business e.g. cash purchases. </li></ul></ul>
  6. 6. Cash Movements <ul><li>Cash Inflows: </li></ul><ul><ul><li>Decrease in debtors. </li></ul></ul><ul><ul><li>Increase in creditors. </li></ul></ul><ul><ul><li>Loan received. </li></ul></ul><ul><ul><li>New capital invested. </li></ul></ul><ul><ul><li>Profits. </li></ul></ul><ul><ul><li>Sale of a fixed asset. </li></ul></ul><ul><ul><li>Sale of stock. </li></ul></ul><ul><li>Cash Outflows: </li></ul><ul><ul><li>Decrease in creditors. </li></ul></ul><ul><ul><li>Dividend payment. </li></ul></ul><ul><ul><li>Drawings. </li></ul></ul><ul><ul><li>Increase in debtors. </li></ul></ul><ul><ul><li>Loan repaid. </li></ul></ul><ul><ul><li>Losses. </li></ul></ul><ul><ul><li>Purchase of a fixed asset. </li></ul></ul><ul><ul><li>Purchase of stock. </li></ul></ul>
  7. 7. The Cash Flow Cycle CASH Buy Resources Use Resources to make Goods and Services Sell Goods and Services to Generate Cash

×