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Unit-5 Financial information and financial decisions - Coggle Diagram
Unit-5
Financial information
and financial decisions
Ch-22, Business Finance
FINANCE DEPARTMENTS
Recording financial Statements
Preparing Final Accounts
Cash Flow Forecast
Producing accounting information
To take financial decisions
Source of finance
INTERNAL
SALE OF EXISTING ASSETS
RETAINED PROFIT
OWNER'S SAVINGS
SALE OF INVENTORIES
EXTERNAL
ISSUE OF SHARES
BANK LOANS
SELLING DEBENTURES
DEBT FACTORING
MICROFINANCE
CROWDFUNDING
GRANTS AND SUBSIDIES
Reasons for finance
Starting-up a business
Expansions of existing business
Additional working capital
CHOOSING SOURCES OF FINANCE
PURPOSE AND TIME REQUIRED
AMOUNT REQUIRED
RISK
CONTROL
Ch-23, Cash Flow Forecasting
and Working Capital
Why is Cash important?
Pay your workers
Smooth run of production
Sufficient money to meet short term debts
Cash Flow
Cash Inflow
Sale of goods
Payments made by a debtor
Borrowings from external source
Sale of Assets
Cash Outflow
Purchasing Goods
Paying wages
Purchasing Non-current assets
Repayments of loan
Payments to Creditors
Cash Flow Cycle
shows the stages between paying
out cash for labour, materials and
so on and receiving cash from the
sale of goods
Uses of Cash Flow Forecast
-Starting up a business
-running an existing business
-managing cash flow
-keeping bank manager informed
Net Cash flow
= Cash inflow- Cash Outflow
Working Capital
Cash needed for day-to-day activities
To achieve higher sales there may be a need to offer additional facilities
sufficient inventories not there production might stop.