MGIS 317 Lecture Notes - Cash Flow, Cost Engineering, Leaseback

• School: University of Calgary
• Department: Management Information Systems
• Course: MGIS 317
• Professor: Ronald Schlenker

Document Summary

Profits do not pay for the running of a business, but cash does. Profits is of course important in the long run, but initially, cash is need to run the business successfully. Cash flow: the sum of cash payments to a business (inflows) minus the sum of cash payments (outflows) Liquidation: when a firm ceases trading and its assets are sold for cash to pay suppliers and other trade creditors. Insolvent: when a business cannot meet its short term debts. Cash flow planning is vital for new entrepreneurs because: New business start-ups are often offered much less time to pay suppliers than larger, well established firms, they are given a shorter credit period. Banks and other lenders may not believe the promises of a new businesses owner, as they have no trading record. Finance is often very tight at start-up, so not planning accurately is of even more significance for a business.