improving cash flow

Question 1

what does an enterprise need to do once an enterprise has spotted a potential cash flow problem?

Answer 1

will need to take action to change the timing or amount of cash inflows and outflows

Question 2

possible actions to improve timing of inflows and outflows:
how can an enterprise increase sales revenue?

Answer 2

either by raising prices or using sales promotions to Increase sales

Question 3

possible actions to improve timing of inflows and outflows:
what can an enterprise do until cash flow improves?

Answer 3

Delay any planned expansion of the enterprise’s activities

Question 4

possible actions to improve timing of inflows and outflows:
why might get a bank loan or overdraft?

Answer 4

may fix the problem in the short term but could be risky

Question 5

possible actions to improve timing of inflows and outflows:
what can an enterprise sell off to raise cash?

Answer 5

unused fixed assets

Question 6

possible actions to improve timing of inflows and outflows:
how can an enterprise reduce customers’ credit terms?

Answer 6

by shortening the time period given for payment

Question 7

possible actions to improve timing of inflows and outflows:
what can be easily sold to raise cash?

Answer 7

inventory stocks

Question 8

possible actions to improve timing of inflows and outflows:
who can an enterprise chase?

Answer 8

debtors for money owned

Question 9

possible actions to improve timing of inflows and outflows:
what can an enterprise pay off?

Answer 9

debts

Question 10

possible actions to improve
timing of inflows and outflows:
what can an enterprise offer to make more sales

Answer 10

offer incentives to sales staff

Question 11

possible actions to improve timing of inflows and outflows:
what can an enterprise reduce to make savings?

Answer 11

reduce fixed and variable costs

Question 12

potential impacts of improving cash flow:

what can it create when an enterprise taken measures to improve cash flow?

Answer 12

create difficulties for the enterprise

Question 13

potential impacts of improving cash flow:

what can reducing customers’ credit terms may result in?

Answer 13

fewer sales of customers switch to competitors that offer more favourable credit terms

Question 14

potential impacts of improving cash flow:

why could selling off inventory result in financial loss?

Answer 14

could be at a lower cost than the purchase cost

Question 15

potential impacts of improving cash flow:

what are examples of selling off unused fixed assets?

Answer 15

machinery
company cars

Question 15

potential impacts of improving cash flow:

what does it mean for the enterprise when selling off unused fixed assets?

Answer 15

that the enterprise is willing to accept a lower price for these assets than they are worth.

Question 16

potential impacts of improving cash flow:

what could delaying planned expansions mean?

Answer 16

not able to take advantage of business opportunities

Question 17

potential impacts of improving cash flow:

what could result in poor quality products and dissatisfied customers?

Answer 17

Reducing costs by purchasing cheaper suppliers or laying off part of the workforce