Cashflow

Question 1

Cash flow is used to pay items of expenditure… What types?

Answer 1

Capital purchases and Loan Payments

Question 2

Describe to benefits of cash flow forecasting?

Answer 2

• The business can predicted at any point where there might be a short-fall in cash flow for them to arrangements in advance with it’s bank or other source of finance to cover the shortfall
• Cash flow forecasting facilitates better management and use of financial resources.

Question 3

List two limitations of cash flow forecasting

Answer 3

• A fore cast is based on assumptions (may not be accurate)

- Customers might not pay on time

Question 4

Why is cash flow needed for a business?

Answer 4

- It establishes how much money is
needed and when it will be needed
- It helps to ensure that capital
expenditure is properly controlled
(e.g. the 'what if' situation)
- It help facing facts and decision making

Question 5

List two examples of cash outflow out of a business?

Answer 5

-

Question 6

What is Cashflow Forecast?

Answer 6

-

Question 7

What are Inflows?

Answer 7

-

Question 8

What are Outflows?

Answer 8

-

Question 9

What are Net Inflow/Outflow and what does it do?

Answer 9

-

Question 10

What is an Opening Balance?

Answer 10

-

Question 11

What is Closing Balance?

Answer 11

-