CASH FLOW

25問 • 2年前

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is defined simply as the flow of money coming in from a source which can be income for a family, a personal allowance, or revenues business, and going out, which can be spending for personal or family needs or paying for operations and debts in a business.

Cash flow

For a family, an individual, or a business to be sound and healthy, there should be — to meet needs or pay for its obligations.

enough money or cash available

Just like the water tank there should be enough water available inside the tank to meet the — inside the house.

water requirement

Cash flow is a — process and there should be a steady stream of cash coming in to meet the periodic and regular payment of the family or business obligations over a certain period.

continuous

Cash flow is important in any endeavor, be it —,—,or— because it is an indication whether the operations of any of these entities are — or —

personal, family, or in business succeeding or failing.

For instance, we know that when operating business, the primary goal is for the business to make money and be profitable In the course of doing business, there will be operating expenses that will be incurred in connection with the business operations. If the business is to generate profit, the — should be less than the revenue or income.

Operating Expenses

In most businesses, the — of the company may not always be the same in a given period.

income

If the company is engaged in selling products or consumer goods, there will be periods when sales may be high in a particular month but considerably less in the following month. This means that its income may be influenced by the — or — of the product.

demand or seasonality

However, the operating expenses could be —, meaning that every month the same expenses are incurred, such as salaries of employees, rent, utilities raw fuel, transport, etc

fixed or constant

With —, one should be able to PROJECT how MUCH CASH IS NEEDED to operate the business in a given period if one knows fully well how much sales of products or income is generated in a period time and the amount of cash needed to pay for the business' obligations.

cash flow

In real terms, cash flow should be able to show the of cash that is being transferred — the business for a given period..

inside and outside

As mentioned before, for a business to operate smoothly, one must ensure that there is enough money generated to be able to meet all the requirements of the business. Therefore, if there is enough money going in or being generated to be able to pay the debts and/or expenses of the business, then one can say that there is a —.

positive cash flow

In other words, the company is — and has — as not only is it able to PAY ITS DEBTS, it also has RESERVES OR SAVINGS for FUTURE REQUIREMENTS.

liquid surplus cash

The — can also be used as additional investment or capital to expand the business.

surplus cash

On the other hand, if the cash available is not enough to pay its obligations because of poor sales of products or because the amount of money that goes in is less than the cash needed to pay its obligations or debts, then one has a —.

negative cash flow

In this situation, the business has to find ways to look for additional cash

Negative cash flow

A business is — when there is a positive cash flow, which means that the business has enough funds to pay its obligations.

healthy

A business is not healthy when there is a —, which means that it is not doing well because it is experiencing a cash shortage over a particular period.

negative cash flow

However, this can be temporary and the business can recover in due time

negative cash flow

If the business, however, is experiencing negative cash flow over a long period, it's an indication that it is not doing well and may go eventually —.

bankrupt

The key here is to build a positive cash flow, which is to build a system with

more cash inflows than cash outflows.

One should be able to do this properly by

(1) ensuring expenses are incurred only when necessary and at the proper time; (2) settling liabilities or debts at the most reasonable period both for the family or business and its creditors; and (3) putting aside a part of the income or revenues as savings so that a contingency fund is set up.

A — is an amount of money set aside to meet unexpected events requiring funding.

contingency fund

is very important in the management of cash flow.

Timing

A — shows the amount of cash available to settle obligations.

cash flow statement

ALERTNESS

Trix Soriano · 24問 · 2年前

ALERTNESS