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      • Option D: Medicinal Chemistry >
        • D.1 PHARMACEUTICAL PRODUCTS AND DRUG ACTION
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        • D.7 Taxol- A Chiral Auxiliary Case Study
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      • Tips & Guides
      • TOPIC 1: CELL BIOLOGY >
        • 1.1 Introduction to cells
        • 1.2 Ultrastructure of Cells
        • 1.3 Membrane Structure
        • 1.4 Membrane Transport
        • 1.5 Origin of Cells
        • 1.6 Cell Division
      • TOPIC 2: MOLECULAR BIOLOGY >
        • 2.1 Molecules to metabolism
        • 2.2 Water
        • 2.3 Carbohydrates and Lipids
        • 2.4 Proteins
        • 2.5 Enzymes
        • 2.6 Structure of DNA and RNA
        • 2.7 DNA Replications, Transcription and Translation
        • 2.8 Cell Respiration
        • 2.9 Photosynthesis
      • Topic 3: Genetics >
        • 3.1 Genes
        • 3.2 Chromosomes
        • 3.3 Meiosis
        • 3.4 Inheritance
        • 3.5 Genetic Modification and Biotechnology
      • Topic 4: Ecology >
        • 4.1: Species, Communities and Ecosystems
        • 4.2 Energy Flow
        • 4.3 Carbon Cycling
        • 4.4 Climate Change
      • Topic 5: Evolution and Biodiversity >
        • 5.1 Evidence for evolution
        • 5.2 Natural Selection
        • 5.3 Classification and Biodiversity
        • 5.4 Cladistics
      • Topic 6: Human Physiology >
        • 6.1 Digestive System
        • 6.2 The blood system
        • 6.3 Defense against infectious disease
        • 6.4 Gas Exchange
        • 6.5 Neurons and Synapses
        • 6.6 Hormones, Homeostasis and Reproduction
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      • Option A: Freshwater
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      • Unit 1: Business Organization and Movement >
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        • 1.6 Growth and evolution
      • Unit 2: Human Resource Management >
        • 2.1 The functions and evolution of human resource management
        • 2.2 Organizational structure
        • 2.3 Leadership and management
        • 2.4 Motivation
      • Unit 3: Finance and Accounts >
        • 3.1 Sources of Finance
        • 3.2 Costs and Revenues
        • 3.3 Break-even analysis
        • 3.4 Final accounts
        • 3.5 Profitability and liquidity ratio analysis
        • 3.7 cash flow
      • Unit 4: Marketing >
        • 4.1 The role of marketing
        • 4.2 Marketing Planning
        • 4.4 Market Research
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      • Topic 1: Measurements and Uncertainties
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3.7 Cash flow

For this chapter, you should be able to...

1. distinguish between profit and cash flow
2.
explain the working capital
3.
construct and interpret cash-flow forecasts
4.
comment on the relationship between investment, profit and cash flow
5.
evaluate possible strategies for dealing with cash-flow problems.

​

1. difference between profit and cash flow

Cash = money that gets into the business through either the sale of its goods or services
          = the most liquid asset in a business and is found under current assets in the balance sheet
          = essential to the smooth running of any business

Cash flow = money that flows in and out of a business over a given period of time
                   = a key indicator of a firm's ability to meet its financial obligation
                   = positive cash flow will enable businesses to meet their day-to-day running costs
  • Cash inflows = the money received by a business
  • Cash outflows = money paid out by a business over a period of time

Profit = obtained by subtracting total costs from total revenue
           = great indicator of the financial success of a firm's core operations

Profit and cash flow are different. 
  • A business can be profitable but have little or no cash
  • A business can have a positive cash flow but be unprofitable

​​

2. working capital

Working capital = money needed to pay for the day-to-day running cots of a business. 
                             = includes paying wages, purchasing raw materials, and paying for electricity and gas
                             = also known as net current assets
Formula: Working capital = current assets - current liabilities 
Current assets = liquid assets of the business, including cash, debtors and stock
Current liabilities = money the business owes that need to be paid in the short term, including creditors and bank overdrafts

To have sufficient working capital, businesses need to ensure that their current assets exceed their current liabilities.

Working capital cycle = the period of time between payment for goods supplied to a business and the business receiving cash from their sale.

​

3. cash-flow forecasts

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  • Home
  • IB STUDY MATERIALS
    • Psychology SL/HL >
      • Tips & Guide
      • Biological Approach >
        • Brain and Behaviour
        • Hormones and Pheromones
        • Genetics and Evolution
        • HL Animal Research
      • Sociocultural Approach >
        • Individual and the group
        • Cultural Origins
        • Cultural Influences
        • HL Globalization
      • Cognitive Approach >
        • Cognitive Processing
        • Reliability of Cognitive Processes
        • Emotion and Cognition
        • HL Digital World
      • B. Human Relationships >
        • Personal Relationships
        • Group Dynamics
      • D. Developmental >
        • Developing as a Learner
        • Developing an Identity
      • Studies >
        • Biological Approach
        • Sociocultural Approach
        • Cognitive Approach
        • B. Human Relationships
        • D. Developmental
    • Chemistry SL/HL >
      • Tips & Guide
      • All Vocab Definitions
      • ALL EQUATIONS
      • Unit 1,2 & 12
      • Unit 3 &13
      • Unit 4 &14
      • Unit 5,6,7 & 15,16,17
      • Unit 8 & 18
      • Unit 9 & 19
      • Unit 10 & 20
      • Unit 11 & 21
      • Option D: Medicinal Chemistry >
        • D.1 PHARMACEUTICAL PRODUCTS AND DRUG ACTION
        • D.2 Aspirin and penicillin
        • D.3 Opiates
        • D.4 pH Regulation of the Stomach
        • D.5 Antiviral Medications
        • D.6 Environmental impact of some medications
        • D.7 Taxol- A Chiral Auxiliary Case Study
        • D.8 Nuclear Medicine
        • D.9 Drug Detection and Analysis
    • Biology SL >
      • Tips & Guides
      • TOPIC 1: CELL BIOLOGY >
        • 1.1 Introduction to cells
        • 1.2 Ultrastructure of Cells
        • 1.3 Membrane Structure
        • 1.4 Membrane Transport
        • 1.5 Origin of Cells
        • 1.6 Cell Division
      • TOPIC 2: MOLECULAR BIOLOGY >
        • 2.1 Molecules to metabolism
        • 2.2 Water
        • 2.3 Carbohydrates and Lipids
        • 2.4 Proteins
        • 2.5 Enzymes
        • 2.6 Structure of DNA and RNA
        • 2.7 DNA Replications, Transcription and Translation
        • 2.8 Cell Respiration
        • 2.9 Photosynthesis
      • Topic 3: Genetics >
        • 3.1 Genes
        • 3.2 Chromosomes
        • 3.3 Meiosis
        • 3.4 Inheritance
        • 3.5 Genetic Modification and Biotechnology
      • Topic 4: Ecology >
        • 4.1: Species, Communities and Ecosystems
        • 4.2 Energy Flow
        • 4.3 Carbon Cycling
        • 4.4 Climate Change
      • Topic 5: Evolution and Biodiversity >
        • 5.1 Evidence for evolution
        • 5.2 Natural Selection
        • 5.3 Classification and Biodiversity
        • 5.4 Cladistics
      • Topic 6: Human Physiology >
        • 6.1 Digestive System
        • 6.2 The blood system
        • 6.3 Defense against infectious disease
        • 6.4 Gas Exchange
        • 6.5 Neurons and Synapses
        • 6.6 Hormones, Homeostasis and Reproduction
    • Physics SL >
      • Must-have Resources
      • Full Study Resources
      • Other Resources
      • Tips & Guide
      • IA, Lab Report
      • Topic 1: Measurements & Uncertainties
      • TOPIC 2: MECHANICS
      • TOPIC ​3: THERMAL PHYSICS
      • Topic 4: Waves
      • Topic 5: Electricity & Magnetism
      • Topic 6: Circular Motion & Gravitation
      • Topic 7: Atomic, Nuclear, & Particle Physics
      • Topic 8: Energy Production
      • Option D: Astrophysics
    • Geography SL/HL >
      • Tips & guide
      • Unit 1: Changing population
      • Unit 2: Global climate—vulnerability and resilience
      • Unit 3: Global resource consumption and security
      • Unit 4: Power, Places and Networks
      • Unit 5: Human Development and Diversity
      • Unit 6: Global Risks and Resillience
      • Option A: Freshwater
      • Option B: Ocean and Coastal Margins
      • Option C: Extreme Environments
      • Option E: Leisure, tourism and sport
    • Business SL/HL(pending) >
      • Tips & guides
      • Unit 1: Business Organization and Movement >
        • 1.1 Nature of Business
        • 1.2 Types of Organizations
        • 1.3 Organizational objectives
        • 1.4 Stakeholders
        • 1.5 External Environment
        • 1.6 Growth and evolution
      • Unit 2: Human Resource Management >
        • 2.1 The functions and evolution of human resource management
        • 2.2 Organizational structure
        • 2.3 Leadership and management
        • 2.4 Motivation
      • Unit 3: Finance and Accounts >
        • 3.1 Sources of Finance
        • 3.2 Costs and Revenues
        • 3.3 Break-even analysis
        • 3.4 Final accounts
        • 3.5 Profitability and liquidity ratio analysis
        • 3.7 cash flow
      • Unit 4: Marketing >
        • 4.1 The role of marketing
        • 4.2 Marketing Planning
        • 4.4 Market Research
        • 4.5 The four ps
        • 4.8 E-commerce
      • Unit 5: Operations Management >
        • 5.1 The role of operations Management
        • 5.2 Production methods
        • 5.4 Locations
    • Economics SL/HL (pending) >
      • Tips & guides
      • MICROECONOMICS >
        • 1.1 Competitive Markets: Demand and Supply
      • macroeconomics
    • Chinese B SL >
      • Oral Example
    • Extended Essay (EE) >
      • General Tips
      • Physics EE
    • Internal Assessment (IA) >
      • General Tips
    • Theory of Knowledge >
      • Essay Example
      • Presentation Example
    • Other notes >
      • Topic 1: Measurements and Uncertainties
      • Topic 2: Mechanics
      • Topic 3: Thermal Physics
      • Topic 4: Waves
      • Topic 5: Electricity and Magnetism
      • Topic 6: Circular Motion and Gravitation
      • Topic 7: Atomic, Nuclear and Particle Physics
      • Topic 8: Energy Production
      • Option D: Astrophysics
    • Other Citations
  • UNI application
    • United States
    • United Kingdom >
      • Academic Schools
      • Art & Design Schools
    • China
    • Japan
    • Hong Kong
    • Canada (pending)
    • Australia (pending)
  • our warm advice
    • academic advice!
    • Toxic Productivity
    • Finding Your Balance
    • Giving Up
    • YOLO?
    • Are grades important
    • Danger of Quotes
    • How to Destress
  • About us