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Cash Flow Learning Trail
Part 2: The Parts of a Cash Flow Forecast
To obtain a picture of what a cash flow forecast is made up of we will examine the Cash Flow Forecast of GoodWood Trading. GoodWood is a Sole Trader who is just setting up in business; the business manufactures wooden Garden Furniture. The items made will be sold through Gardening Exhibitions, and to local Garden Centers on a Credit basis. The predicted cash flow forecast for the first six months of trading is shown below.
| |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
| Revenue |
|
|
|
|
|
|
| Cash Sales |
600 |
1200 |
1750 |
2300 |
2600 |
3000 |
| Debtors Payments |
0 |
600 |
850 |
1300 |
1490 |
1430 |
| Total Revenue |
600 |
1800 |
2600 |
3600 |
4090 |
4430 |
| |
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
| Raw Materials |
970 |
1200 |
1350 |
1380 |
1670 |
1500 |
| Wages |
800 |
800 |
800 |
900 |
900 |
900 |
| |
220 |
220 |
220 |
220 |
220 |
220 |
| Rates |
40 |
40 |
40 |
40 |
40 |
40 |
| Electricity |
60 |
60 |
60 |
100 |
100 |
100 |
| Travelling |
80 |
80 |
150 |
150 |
150 |
150 |
| Sundries |
130 |
80 |
80 |
80 |
80 |
80 |
| Exhibition Charges |
150 |
150 |
250 |
250 |
300 |
300 |
| Total |
2450 |
2630 |
2950 |
3120 |
3460 |
3290 |
| |
|
|
|
|
|
|
| Net Cash Flow |
-1850 |
-830 |
-350 |
480 |
630 |
1140 |
| |
|
|
|
|
|
|
| Opening Balance |
750 |
-1100 |
-1930 |
-2280 |
-1800 |
-1170 |
| + / - Net Cash Flow |
-1850 |
-830 |
-350 |
480 |
630 |
1140 |
| Closing Balance |
-1100 |
-1930 |
-2280 |
-1800 |
-1170 |
-30 |
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Most of the terms used in the cash flow forecast will probably be familiar to you from your studies, but do not worry if it looks a little difficult, to ensure that the structure is clear we will now examine the parts of the cash flow forecast in detail.
Follow the links below to find out about each of the main parts:
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