2.2

Question 1

Strategies to minimize cash outflow

Answer 1

Reduces outflows from the operation
Reduces cash drawing
Defer the purchase of non current assets

Question 2

Strategies to generating cash inflow

Answer 2

Increase sales
Implement strategies to manage account receivable
Use loan and capital contribution to finance the purchase of non current assets

Question 3

Liquidity

Answer 3

Refers to the ability of the firm to generate cash so that it can meet its short term debts as they fall due

Question 4

Non financial information

Answer 4

Any information that can not be expressed in dollars or cents.
number of website hits in the last month
number of customer complaints
number of expected sales in the next period.

Question 5

Benchmark

Answer 5

Can be compared against CFC from previous periods, budgeted performance and competitors performance (Industry averages) to determine it has improved or worsen

Question 6

CFC formula

Answer 6

Net cash flow from operation/ average current liabilities

Question 7

Cash Flow Cover (CFC)

Answer 7

a liquidity indicator that measures the number of times Net Cash Flows from Operations is able to cover average current liabilities.

Question 8

situations that affect cash but not profit

Answer 8

Cash Drawings
Cash Purchase of NCA

Question 9

situations that affect profit but not cash

Answer 9

Depreciation
Inventory loss/gain
Bad Debts

Question 10

situations that affect profit more than cash

Answer 10

Credit sales are higher than receipts from Accounts Receivable

Cost of Sales are higher than payments to creditors

Question 11

situations that affect cash more than profit

Answer 11

Credit sales are lower than receipts from Accounts Receivable

Cost of Sales are lower than payments to creditors