Cash Flow

Question 1

cash

Answer 1

money spent immediately by a business

Question 2

cash inflow

Answer 2

cash going into a business

Question 3

cash outflow

Answer 3

cash going out of a business

Question 4

opening balance

Answer 4

cash a business begins to trade with

Question 5

closing balance

Answer 5

cash a business ends trading with

Question 6

what happens if a business’ cash flow in unstable?

Answer 6

run out of money, suppliers/ employees/ rent/ raw materials unable to be paid, issues for stakeholders, poor relationship with creditors/ suppliers, resignations

Question 7

how can a business fix its unstable cash flow?

Answer 7

reschedule cash payments, new sources of finance to overcome liquidity problem, increase cash flow, overdraft, decrease cash flow