Cash flow

Question 1

NCW

Answer 1

Net Present Value

Question 2

Free Cash flow

Answer 2

cash inflows generated by sales minus cash outflows related to the purchase and use of production resources. Cash in- and outflows related to finance are not part of free cash flow

Question 3

Reorder point

Answer 3

When certainty: Sales volume per day * order lead time
When uncertainty: Maximum sales volume per day * maximum order lead time

Question 4

Safety inventory

Answer 4

Addition inventory due to uncertainty
= maximum daily sales volume * maximum order lead time - average daily sales * average delivery time

Question 5

Factoring

Answer 5

outsourcing processing and collection of recievables to specialist company

Question 6

Cash management: motives for retaining cash and cash equivalents

Answer 6

Transaction motive
Precautionary motive
Speculative motive

Question 7

Cash flow forecast

Answer 7

overview of expected cash inflows and cash outflows