Chapter 11 - Reporting for Cash

Question 1

Uses for the Cash Flow Statement

Answer 1

-Assess the performance against its cash targets
- Plan for future cash activities
- Calculate financial indicators

Question 2

Strategies to generate cash inflow

Answer 2

• Increase Sales Revenue (through more cash sales)
• Implement strategies to manage AR
• Use loans and capital contribution to finance the purchase of NCA

Question 3

Strategies to minimise cash outflows

Answer 3

• Reduce Expenses
• Utilise the credit terms offered by suppliers
• Reduce cash drawings or loan repayments
• Defer purchases of NCA

Question 4

How is Cash Flow Cover calculated

Answer 4

Net Cash Flow from Operations/ Average Current Liabilities