Cash flow

Which of the following is true about cash flow?

• It is the same as profit
  
• It is different from profit
  
• It is the same as revenue
  

Where does the main cash inflow for most businesses come from?

• Customers paying for products
• Interest received on loans
  
• Interest payments on a bank overdraft

What is net cash flow?

• The difference between revenue and cost
• The difference between money in and money out
• The difference between assets and liabilities
  

Which of the following is an example of a cash inflow?

• A new bank loan
  
• Payment of a gas bill
• Offering trade credit to a customer

How can cash outflows be improved?

• Buy extra equipment
  
• Lease out equipment
• Use a factoring service
  

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

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 is the best explanation for a business running into cash-flow problems?

• demanding quick payment from customers
• allowing customers a long credit period
• delaying payments to suppliers
• producing goods when demanded by customers

Business cash flow forecasts are of use in all of the following situations except:

• calculating last year’s profit or loss
• finding out how much cash will be needed to start a business
• keeping informed about the liquidity of the business
• helping the manager to plan when to borrow money

The monthly net cash flow for a business is calculated by:

• sales revenue - cost of goods sold
• total cash in - total cash out
• total cash out - total cash in
• total cash in - cost of goods sold