Cash flow forecasts

Question 1

cash sales

Answer 1

reciepts (inflows)

Question 2

credit sales

Answer 2

reciepts (inflows)

Question 3

loans

Answer 3

reciepts (inflows)

Question 4

capital introduced

Answer 4

reciepts (inflows)

Question 5

sale of assets

Answer 5

reciepts (inflows)

Question 6

bank interest recieved

Answer 6

reciepts (inflows)

Question 7

cash purchases

Answer 7

payments (outflows)

Question 8

credit purchases

Answer 8

payments (outflows)

Question 9

rent

Answer 9

payments (outflows)

Question 10

rates

Answer 10

payments (outflows)

Question 11

salaries

Answer 11

payments (outflows)

Question 12

wages

Answer 12

payments (outflows)

Question 13

utilities

Answer 13

payments (outflows)

Question 14

purchase of assets

Answer 14

payments (outflows)

Question 15

value added tax (VAT)

Answer 15

payments (outflows), current rate is 20%

Question 16

bank interest paid

Answer 16

payments (outflows)

Question 17

benefits of cash flow forecasts

Answer 17

encourages planning for inflows and outflows, helps identify potential shortfalls in cash balances, enables cash flow to be monitored

Question 18

limitations of cash flow forecasts

Answer 18

based on forecasts so may be inaccurate, cannot plan for unexpected events, time taken to create one could have been used more productively

Question 19

improving cash flow by inflows

Answer 19

using financial institutions, short term loan, debt factoring, cash payments from customers, credit control (chasing payments)

Question 20

improving cash flow by outflows

Answer 20

delaying payments to suppliers, stock management, reduce overhead spending

Question 21

difficulties improving cash flow

Answer 21

damage to the firm’s reputation, potential loss of customers, administrative costs, may affect profitability