Anonymous

What Are The Disadvantages Of Cash Flow?

7 Answers

Smith Baker Profile
Smith Baker answered

The disadvantage of the statement of cash flow
is that it does not consider future growth. It shows the information about the
past business operations. Another disadvantage is that interpreting data is
difficult from this statement.

Anonymous Profile
Anonymous answered
Credit Payments.
Cash flow may be worsened if the business needs to give credit terms to its customers in order to boost sales.
Anonymous Profile
Anonymous answered
They don't take into account the moral dimensions of a company
Anonymous Profile
Anonymous answered
The cost will mean a reduction in your profit margin on each order or service fulfilment.
It may reduce the scope for borrowing - book debts will not be available as security.
Factors may want to vet your customers and influence the way that you do business.
It may be difficult to end an arrangement with a factor as you will have to pay off any money they have advanced you on invoices if the customer has not paid them yet.
Some customers may prefer to deal directly with you.
How the factor deals with your customers will affect what your customers think of you. Make sure you use a reputable company that will not damage your reputation.
You have to pay extra to remove your liability for bad debtors.
Anonymous Profile
Anonymous answered
The disadvantages of cash flow are that accurate figures are needed as an input to get the same quality of output. Also it doesn't account to variable change so damage costs aren't included
Anonymous Profile
Anonymous answered
If a business get the wrong record for their cash in flows and out flows, they won't know when they have to overcome their out flow by increasing their cash in flow
Anonymous Profile
Anonymous answered
It gives you the correct picture as to whether a company can remain as a going concern for the future.

Answer Question

Anonymous