Money Needed for This Business A-Level Outline Answer

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One needs to keep the following questions in mind in order to understand cash flow-in and out of an organization:

1. How much cash does my business have?

2. How much cash does my business need to operate?

3. Where does my business receive its cash? Where does it spend its cash?

4. How do my income and expenses affect the amount of cash I need to expand my business?

Flow-out of cash goes to cover supplies, equipment, payroll and other needs that a business needs to cover in order to achieve its business purpose.

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Cash is needed for operating expenses, taxes, interest and principal to creditors, and dividends to stockholders. Flow-out of cash enables the business to be conducted. The amount of flow-in, however, determines whether the business can be sustained (i.e. whether there is a profit and a marked profit), and whether it is rational for flow-out to continue. Flow-in, too, determines the amount of flow-out for business….....

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