Cash Flow Basics
This is the amount of money a business has at the start of the month.
What is the opening balance?
When a business has more money coming in than going out, this is called this.
What is a surplus?
This measures how long it takes to recover the cost of an investment.
What is the payback period?
This investment appraisal method gives an answer as a percentage.
What is ARR?
This is found by dividing total labor cost by total output.
What is labor cost per unit?
This term describes money coming into a business from sales or loans.
What are cash inflows?
When a business has more money going out than coming in, this is called this.
What is a deficit?
To calculate payback period, you divide the initial investment by this.
What is annual cash inflow?
ARR uses this type of profit in its calculation.
What is average annual profit?
If actual labor cost per unit is lower than expected, the business is this.
What is more efficient?
This term describes money leaving a business to pay expenses like rent and wages.
What are cash outflows?
Daily Double!!! January’s closing balance becomes this for February.
What is the opening balance?
A shorter payback period means this type of investment risk.
What is lower risk?
To find total profit, subtract the investment cost from this.
What is total revenue?
Total labor cost can be found by multiplying number of employees by this.
What is average salary?
This is calculated by subtracting total outflows from total inflows.
What is net cash flow?
This financial tool helps businesses predict future cash shortages.
What is a cash flow forecast?
Daily Double!!!! If a project costs $600,000 and earns $150,000 per year, this is the payback period.
What is 4 years?
If Investment A has a higher ARR than Investment B, it is usually considered this.
What is more profitable?
If labor cost per unit increases, this likely happens to profits.
What is they decrease?
This is found by adding net cash flow to the opening balance.
What is the closing balance?
Even if a business is profitable, it can fail if it runs out of this.
What is cash?
Payback period answers are typically measured in this unit of time.
What are years?
ARR is calculated by dividing average annual profit by this, then multiplying by 100.
What is the cost of the investment?
If a business budgeted $20 per unit but actual cost is $16, it is saving this per unit.
What is $4?