Studied by 0 peopleLiquidation
________: when a firm ceases trading and its assets are sold for cash.
Insolvent
________: when a business can not meet its short- term debts.
Current liabilities
________: debts of the business that will usually have to be paid within one year.
Current assets
Working capital= ________- Current liabilities.
Liquidation
when a firm ceases trading and its assets are sold for cash
Insolvent
when a business cannot meet its short-term debts
Net cash flow
sum of cash payments to a business (inflows) less the sum of cash payments made by it (outflows)
Cash outflows
payments in cash made by a business, such as those to suppliers and workers
Cash inflows
payments in cash received by a business, such as those from customers (debtors) or from the bank, e.g
Working capital = Current assets
Current liabilities
Current assets
stocks, debtors (= customers who have bought products on credit and will pay cash at an agreed date in the future) and cash
Current liabilities
debts of the business that will usually have to be paid within one year
Liquidation
When a firm ceases trading and its assets are sold for cash
Insolvent
When a business cannot meet its short-term debts
Net cash flow
Sum of cash payments to a business (inflows) less the sum of cash payments made by it (outflows)
Cash outflows
Payments in cash made by a business, such as those to suppliers and workers
Cash inflows
Payments in cash received by a business, such as those from customers (debtors) or from the bank, e.g. receiving a loan
Current assets - Current liabilities
Working capital
Current assets
Stocks, debtors (= customers who have bought products on credit and will pay cash at an agreed date in the future) and cash
Current liabilities
Debts of the business that will usually have to be paid within one year
Working capital cycle
Period of time between spending cash on the production process and receiving cash payments from customers
Structure of cash flow forecasts
Cash inflows, cash outflows, net monthly cash flow and opening and closing balance
Lack of planning; poor credit control; allowing customers too much credit; expanding too rapidly; unexpected events
5 causes of cash flow problems
Reducing cash outflows; improving cash inflows; sourcing additional finance
3 strategies for dealing with cash flow problems
Note 
Flashcard (32)