BS5- Cash Flow

Question 1

What is cash flow?

Answer 1

A business needs sufficient inflows of cash to finance its day to day outgoings.

Question 2

Why business’s produce a cash flow forecast?

Answer 2

enables businesses to track the expected cash movements over a period of time in the future.

Question 3

Identify 3 types of cash inflows

Answer 3

Overdraft
Loan
Grants

Question 4

Identify 3 types of cash outflows

Answer 4

Money spent on fixed assets
Salaries
Payments to suppliers

Question 5

List 3 causes of cash flow problems

Answer 5

Low profits
Too much stock
Overtrading

Question 6

List three ways a business could manage or improve cash flow problems

Answer 6

Be very careful about what they spend
Plan out investments
Push for high sales

Question 7

Identify 3 limitations of using cash flow forecasts

Answer 7

Limited Information
Volatile Business Environment
It is only a estimate

Question 8

List 3 reasons why business use cash flow forecast

Answer 8

It helps them to plan
Enable business to track expected cash movement
Will help them to not overspend