Unit 3.7

Question 1

Go to haiku to practice cash flow forecast

Question 2

What is the difference between cashflow and profit?

Answer 2

Profit is defined as revenue less expenses. It may also be referred to as net income.

Cash flow, on the other hand, refers to the inflows and outflows of cash for a particular business.

Question 3

What is the working capital cycle

Answer 3

There is a period of time from buying inputs to receive cash for sale

Working capital is how much is needed in this time

Question 4

Cash flow forecast

Answer 4

Example: (Monday)

Opening balance 100

Cash inflow

Debt 50

Sell phone 100

Total cash inflow 150

Cash outflow

Shopping 80

Cinema 20

Present 100

Total cash outflow 200

Net cash flow -50 (150 - 200)

Closing Balance 50 (-50 + (100) opening balance)

Question 5

Strategies for improving cashflows

Answer 5

Improving cash inflows

• Improve credit terms
• Increase cash sales

Reducing Cash Outflows

• Delay payments to creditors
• Delay spending on capital equipment
• Rent/lease rather than buy
• Cut unnecessary overheads
• Don’t pay staff