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2.3 - Coggle Diagram
2.3
Factors of amount of cash required by a business
Size of the company
Opportunity cost
Availability of near liquid assets
Interest rate of bank overdraft
Cash Flow Statement
Operating Activities
Day-to-day activities of buying and selling goods
Financing Activities
Investing Activities
Activities of investment in non-current assets long term use
Cash Flow Statement Preparation
Direct Method
Indirect Method
Importance of Cash for a Business
Day-to-day trading purposes
To pay customers and suppliers
Wages and Salaries
To deal with uncertainties
Bankrupt Cutomers
Price increses or interest rate rises
Take advantage of opportunities
Launch a new product
Entering a new market
Working Capital Management Cycle
(Excess if: current assets - current liabilities)
Cash / Bank overdraft
Trade payable / Account payable
Raw Materials
Work in Progress
Finished goods
Trade Receivable / Account Receivable