Cash Flow Forecasts

What is the formula used for a cash flow forecast?

• [ Receipts - Payments = Net Cash Flow ] + Opening Balance = Closing Balance.

• [ Receipts - Payments = Net Cash Flow ] - Opening Balance = Closing Balance.

A cash flow statement shows an overview of money flowing in and out of a company

• True

• False

Which of the following is an example of a cash in-flow for a business?

• payment to suppliers
• paying back a loan to a bank
• payment from debtors
• purchase of fixed assets

Which of the following is an example of a cash out-flow for a business?

• payments to creditors
• sale of goods
• payment from debtors
• receiving a loan from the bank

Which of the following is NOT a use of cash-flow forecasts?

• They indicate how much cash is available for paying bills
• They show how much the bank needs to lend to stop insolvency
• They indicate whether the business is holding too much cash
• They indicate how much profit the business will make

Which of the following is the value of x?

• £2

• £4

• £6

• (£2)

Which of the following is the value of y?

• £4

• £6

• £9

• (£9)

Which of the following is the value of z?

• £2

• £5

• £(15)

• £(5)

A firm is forecast to have a negative closing bank balance. Which would reduce the problem?

• sell more goods on 4 months credit
• produce more goods
• ask customers to pay in cash and not sell goods on credit
• ask suppliers if the firm can pay for goods in cash

If a cashflow forecast suggests that a firm will run out of cash, which would help the problem?

• purchase more fixed assets
• repay a bank loan
• pay suppliers immediately
• delay paying suppliers