Finance

Question 1

Profit

Question 2

Cash Flow

Answer 2

the money that flows into and out of the business on a day-to-day basis

Question 3

Cash Inflows

Answer 3

income from sales revenue
loans from banks
money invested by business owners

Question 4

Cash Outflows

Answer 4

buying raw materials
employee wages
rent or mortgage
interest on loans
taxes

Question 5

Cash flow benefits

Answer 5

can avoid borrowing and having to pay interest
banks have greater confidence in the business
avoids risk of business failure

Question 6

Cash Flow Forecast

Answer 6

a plan of expected future inflows and outflows over a period of time

Question 7

Cash Flow Statement

Answer 7

a record of previous cash inflows and outflows that have taken place over a period of time

Question 8

Net Cash Flow

Answer 8

total inflows - total outflows

Question 9

Closing Balance

Answer 9

opening balance + net cash flow

Question 10

Causes of Cash Flow Problems

Answer 10

poor management
the business is making a loss
customers take too long to pay

Question 11

Solutions to Cash Flow Problems

Answer 11

Reschedule payments
Cut costs
Use overdrafts
Find new sources of cash inflows