Cash Flow Forecasts

Question 1

Opening balance

Answer 1

• Amount of cash business has at start of month

- Also closing balance from previous month

Question 2

How can profitable businesses still go bankrupt?

Answer 2

Insufficient cash to cover short-term debts

Question 3

List two ways to improve cash flow. (2)

Answer 3

• Obtain (receivables) faster

- Seek longer (trade credit)