FIN 521 Lecture Notes - Cash Flow
Document Summary
In an ideal world, a business will experience a consistently positive cash flow i. e. the amount of cash coming into the business (cash inflow) is greater than the cash going out of the business (cash outflows) This would allow a busness to build up cash reserves with which to plug cashflow gaps, seek expansion and reassure lenders and investors about the health of the business. However, it is important to note that income and expenditure cashflows rarely occur together, with inflows often lagging behind. An important aim of effective financial management must be to speed up the inflows and slow down the outflows. Payment for goods or services from customers receipt of a bank loan interest on savings and investments shareholder investments increased bank overdrafts or loans. Purchase of stock, raw materials or tools. Purchase of fixed assets - pcs, machinery, office furniture, etc. Dividend payments income tax, corporation tax, vat and other taxes reduced overdraft facilities loan repayments.
