CASH FLOW

MANAGEMENT
GLOSSARY OF
CASH FLOW TERMS

TERM DEFINITION

The process of preparing financial statements from bookkeeping

ACCOUNTING
information

Assets are things a business owns outright, for example fixtures,

ASSETS
fittings and stock

The balance sheet is a financial statement summarising a company's

BALANCE SHEET
assets, liabilities and shareholders' equity at a specific point in time

The break-even point is where what’s coming into a business (income)

BREAK-EVEN POINT
equals what’s being spent (expenses)

BREAK-EVEN POINT IN SALES This calculation shows the sales (dollars) needed to break even

This calculation shows the number of units it must produce to

BREAK-EVEN POINT IN UNITS
break even

A list of planned revenue and expenditure for a given period.

BUDGET Budgets are the formal statement of goals and objectives for a
specific period of time

Budgeting is the process of translating into money terms a business's

BUDGETING
plans for the future

CASH FLOW The measure of cash flowing in and out of a business

A financial document that tracks the flow of cash into and out of a
CASH FLOW STATEMENT
business

A person or business that allows the purchase of goods or services with

CREDITOR an agreement to pay at a later date. A creditor is also someone
a business owes money to

DEBT An amount owed to another person or entity

EXPENSES Refers to things that need to be paid by the business

FINANCING ACTIVITIES The funds that the business took in or paid to finance its activities

The most current prediction of what will actually happen based on

what is happening in the business right now. It is an prediction of two
FORECAST
essential future financial outcomes for a business, projected income
and expenses

The sum of all revenue streams before any deductions or taxes. The
GROSS PROFIT gross profit of a company is the total sales minus the total cost of the
goods sold

The cash generated or spent relating to investment activities that may

INVESTING ACTIVITIES include purchases of physical assets, investments in securities, or the
sale of securities or assets
CASH FLOW
MANAGEMENT
GLOSSARY OF
CASH FLOW TERMS CONTINUED..

TERM DEFINITION

Measures the ability of a company to meet its financial obligations

LIQUIDITY
with the liquid assets available

NET PROFIT The gross profit minus taxes or any other deductions

PAYABLES The debts that a company owes to its creditors and suppliers

A financial document that summarises revenue and expenses and

PROFIT & LOSS STATEMENT
reports the resulting profit or loss

PROFITABILITY The ability of a business to earn a profit

The debts owed to a company by its customers for goods or services

RECEIVABLES
that have been delivered or used but not yet paid for

SUPPLIERS A business that supplies your business with products or a service

The capital of a business which is used in its day-to-day trading

WORKING CAPITAL
operations, calculated as the current assets minus the current liabilities