Business Section: FinanceFurther Reading C.29 Keywords – cash flow, forecast, inflows, outflows, liquid, net cash flow. Class : Y11 Lesson Topic: Finance

Business Section: Finance Further Reading C.29

Keywords – cash flow, forecast, inflows, outflows, liquid, net cash flow.

• Class : Y11

• Lesson Topic: Finance

• Scheme of Work: Cash flow





Lesson Objectives

ALL (KNOWLEDGE)Define and describe a cash flow statement

MOST (ANALYSIS) Examine and Analyse the sections of a cash flow statement

SOME (EVALUATION ) Evaluate the pros and cons & Justify your views on the usefulness of a cash flow statement.

P&DPlanning and

Data

Higher thinking

Skills



Planning ToolsP&DPlanning and

Data



Keyword Definition

Cash flow

Cash flow forecast

Inflow

Outflow

Liquids

Net cash flow

CONNECTIVES



CONNECTIVES for AnalysisCONNECTIVES for ApplicationCONNECTIVES for Evaluation

COMPARINGEqually…As with…Like…In the same way…Similarly…Even so…Likewise…CAUSE & EFFECT

Consequently… Due to…As a result… Therefore..Because of… Because…

CONCLUDINGFirstly… After…Secondly… Before…Overall… I believe…Finally… I think …In conclusion… it depends…To conclude… short term…Meanwhile… Long term…

CONTRASTINGAlthough… Except…Moreover… If…However… Yet…Apart from… Unless…Despite… As long as…

EMPHASISINGMost importantly…Significantly…Notably…Especially…Above all…In particular…Indeed…

QUALIFYINGDespite… Yet…As long as… Unless…Apart from… If…Moreover… Except…However… Although…

ADDINGIn addition… And…Too… Also…Additionally… As well as…Furthermore…

ILLUSTRATINGFor instance… Such as…In the case of… So…For example…As revealed by…As illustrated by…



Climb the LadderA-A*

1. To what extent 2. Do you think3. Evaluate whether (8-10m) 10+ connectives & key words

C-B

1. Explain 2. Compare3. Analyse (5-8m) 5+ connectives & key words

E-D

1. Define 2. Describe3. Identify (2-4m) 2 + connectives & key words

ATDApply to

demonstrate



Cash flow

• Cash is a liquid asset. Most accessible and transferable asset (compared to a building?). Like blood in your body.

• Many start up businesses fail because of lack of CASH, not profit.

• Businesses must manage their cash flow to ensure that they have cash available when it is required. This involves:

• Estimating inflows & outflows of cash



Cash flow management • REDUCE OUTFLOWS, INCREASE INFLOWS.

• Reducing the amount owed by creditors – cash sales, repayment incentives, factoring

• Negotiating payments ON DEBTS. • Leasing and renting instead of buying.



Negative cash flow• This is when on a particular month you spend more than you

receive.• Not a problem if this happens just a couple of times.• Might mean you need to arrange an overdraft or stop buying

things.• Can be a problem if it is every month as it means you have NO

money.



Cash flow DOES NOT show profit

• If you end up with a positive figure at the end of the month this does not mean you have made a profit.

• It just looks at the flow of money on a monthly basis.

• Can a profitable business have negative cash flow?



Can a profitable business have negative cash flow?

Yes, This may be due to: Slow payment by creditors (trade credit)Delay between the purchase of materials and payment

from customer – e.g. constructionLarge capital purchases must be paid for in cash but are

recorded on the profit and loss account over several years



Some useful equations

Cash inflow greater than cash outflow = (+ )cash flow

Cash inflow less than cash outflow = ___ cash flow

Cash inflow – cash outflow = Net cash flow



Figures in £ 000’s

April 2015 May 2015

CASH INFLOWS Wedding party fees 60,000 Same Celebrity appearances 15,000 - 20% Share capital 20,000 -10% TOTAL CASH INFLOWS CASH OUTFLOWS Launch party 8,000 +14%Marquee hire 12,000 SameParty supplies 6,000 SameAdvertising at polo 4,000 +15%

Wardrobe and make-up 4,000 -6%

Holiday in Dubai 7,000 +7%

TOTAL CASH OUTFLOWS

Net cash flow

• For April 2015– Calculate – Inflow,– Outflow,– Net cash flow

• Extension calculate for May.



Opening & Closing Balance • Opening balance is the money a business has at the start of

each month.

• Closing balance is the money at the end of each month (opening balance + net cash flow)

• New opening balance is same as old closing balance.



• Calculate;

• Feb closing balance

• March opening balance

• April closing balance.





Forecasting • HOW? • Look at past data• Research other businesses• Look at secondary data on spending habits

• WHY? • You need to estimate your income – all the money flowing in• You need to estimate your expenditure – all of the money

flowing out• CASH ENSURES SURVIVAL!



Keyword Definition

Cash flow

Cash flow forecast

Inflow

Outflow

Liquids

Net cash flow

CONNECTIVES



Lesson Objectives

ALL (KNOWLEDGE)Define and describe a cash flow statement

MOST (ANALYSIS) Examine and Analyse the sections of a cash flow statement

SOME (EVALUATION ) Evaluate the pros and cons & Justify your views on the usefulness of a cash flow statement.

P&DPlanning and

Data

Higher thinking

Skills



Pass the ParcelAdd as much information you can remember from today’s lesson

When the horn blows – pass your sheet to the next table!

RReview the

Learning



Neighbours

2 things your neighbour has learnt today

1 question your neighbour wants

to ask

RReview the

Learning



Summarise your learning today into a single tweet

140 characters

Keep all of the information

Tweet Tweet

STOP

RReview the

Learning



1 question

you need to ask

2 new things you learnt

3 pieces of information

RReview the

Learning



5 minutes. . . GO

STOP

Documents

Business Section: FinanceFurther Reading C.29 Keywords – cash flow, forecast, inflows, outflows, liquid, net cash flow. Class : Y11 Lesson Topic: Finance