1.3.3 Cash and cash-flow

Question 1

What is cash in business?

Answer 1

The money a business has on hand or in bank accounts, readily available for use.

Question 1

What is cash flow?

Answer 1

The movement of money into and out of a business, representing income and expenditure over a period.

Question 2

Why is cash flow important?

Answer 2

Cash flow is crucial for maintaining liquidity, paying bills, and ensuring the business can operate smoothly without interruptions.

Question 3

What are some common causes of cash flow problems?

Answer 3

Poor sales, high expenses, late payments from customers, and over-investment in stock.

Question 4

What is a cash flow forecast?

Answer 4

A cash flow forecast is a financial document that predicts the cash inflows and outflows over a future period, helping businesses plan and manage their finances.

Question 5

How can a business improve its cash flow?

Answer 5

By reducing expenses, negotiating better payment terms, speeding up receivables, and managing inventory efficiently.