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FIN 521 (2)
D Imaria (1)

Cash outflows.docx

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FIN 521
D Imaria

Introduction to cash flow management 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. Cash inflows The main cash inflows are:  payment for goods or services from customers  receipt of a bank loan  interest on savings and investments  shareholder investments  increased bank overdrafts or loans Cash outflows The main cash outflows are:  purchase of stock, raw materials or tools  wages, rents and daily oper
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