Financial Calculation General Questions

Question 1

A cash flow forecast is a financial statement used to monitor a business’s __________________.

Answer 1

monthly cash flow

Question 2

Cashflow forecast ______________ where ________________ and how much ______________ in the business after a certain period.

Breakeven analysis ____________ if a business will make a _________________.

Answer 2

predicts
cash goes
money is left

predicts
profit or loss

Question 3

Inflow is the money entering a business.
(Every week/ month).

This includes:
1.
2.
3.

Answer 3

1. Sales revenue.
2. Investments.
3. Donations.

Question 4

Outflow is the money leaving the business.

This includes:
1.
2.
3.
4.

Answer 4

1. Rent.
2. Utilities.
3. Insurance.
4. Wages.

Question 5

You deduct all of the______________ from the _____________ to find out the monthly balance.

Answer 5

outflows
inflows

Question 6

What is a credit period?

Answer 6

The time given to customers to pay for goods or services.

Question 7

What is liquidity?

Answer 7

A business’s ability to make short-term cash payments.

Question 8

What is being insolvent?

Answer 8

When a business is unable to meet short-term cash payments.

Question 9

If a business has a negative closing balance, they may become _________________.

Answer 9

insolvent

Question 10

What are the 4 solutions to cash flow problems:
1.
2.
3.
4.

Answer 10

1. Overdraft arrangements.
2. Negotiating terms with creditors.
3. Rescheduling capital expenditure.
4. Leasing an asset.

Question 11

What are the 2 main advantages of a cash flow forecast:
1. Enables cash flow to be _________________ and to take any ____________________.

2. Identifies _____________________________ in advance for a business to plan ____________________.

Answer 11

monitored
corrective actions

negative closing balances
corrective actions

Question 12

What are the 2 main disadvantages of a cash flow forecast:
1. Cannot plan for ________________________.

2. __________ taken to make a cash flow forecast could have been spent on other _______.

Answer 12

unexpected setbacks

Time
tasks

Question 13

What is the current value after depreciation also known as?

Answer 13

Net book value

Question 14

Why does a business need to manage their net current assets:
1.
2.
3.

Answer 14

1. To pay back suppliers.
2. Pay wages for staff.
3. Account for emergencies.

Question 15

What are 4 ways a business can improve their cashflow position:
1.
2.
3.
4.

Answer 15

1. Negotiate with the supplier.
2. Increase their bank loan.
3. Reduce outgoings.
4. Increase the price of products or services.

Question 16

What is capital employed?

Answer 16

The amount of returns a business receives from its start-up capital.