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Cash Flow Learning Trail
Part 1: Introduction to Cash Flow
It is often said that in business "Cash is King", this is said because cash is all important to businesses. Without cash employees cannot be paid, suppliers cannot be paid, and therefore the business will grind to a halt. Cash is the oil in the machine of business, and a Cash Flow Statement tells us the cash inflows and outflows in a business over a period of time. A Cash Flow Forecast is an estimate, made by the business, of the cash it expects to receive over a period (the inflow) and what it expects to spend over that same period (the cash outflow).
Remember that: 'A Cash Flow Statement tells us how much cash is available in a business to keep the business running - the actual cash flow. A Cash Flow Forecast gives an estimate of how much cash will be available in a business. It is used to plan ahead and to help monitor business progress over the period.'
For more detail about cash flow statements follow the links below:
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