Week 5

Question 1

Explain the difference between profit and cash

Answer 1

Profit is earnings after expenses, including non-cash items. Cash is the actual money a company has available. Profit shows performance, while cash reflects liquidity.

Question 2

Statement of cash flows

Answer 2

It shows cash was generated
from operations, sources of cash and how cash was spent.

Question 3

Three types of cash flows

Answer 3

• cash flows from operating activities
• cash flows from investing activities,
• cash flows from financing activities

Question 4

Cash flows from investing activities

Answer 4

Cash used for or generated from buying/selling assets, such as equipment or investments.

Question 5

Cash flows from operating activities

Answer 5

Cash generated from the core business activities, like sales and expenses.

Question 6

Cash flows from financing activities

Answer 6

Cash received from or paid to investors and creditors, like issuing shares or repaying loans.