Finance - Business Revision Notes
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- This is a written plan where the business lays out its future cash receipts and payments for a period. Indicates if the business will have a surplus or deficit in the future.
- Cash receipts are received from selling goods, income earned on investment and rent received from tenants.
- Cash payments include cash paid for buying stock, suppliers, dividends paid out, expenses and taxes paid to Revenue.
- Predicted cash deficits can be avoided by increasing cash receipts and reducing cash payments.
- Use Credit Control Methods: this can be achieved by offering incentives for prompt payments. This will generate more cash for the company.
- Sell Investments: investments can be sold to raise cash if needed. Selling investment properties etc. will generate cash for the business.
- Reduce Prices: this should encourage customers to spend more increasing the amount of sales for the business.
- Cutbacks: the business can lower the amount of cash leaving the business through lowering expenses. This can include wage cuts, employing cheaper service providers etc.
- Reduce Dividend Paid: the amount of dividend paid out to customers could be reduced by offering them additional shares in the company instead. To achieve this, shareholders must have a belief the company will succee...