IB BM 3.7 Cash flow overview

A cash flow is useful for

• Informing the business about its profits

• Helping the business see where cash shortages may occur

• Seeing the flow of cash from the business to the bank

• Choosing the best method of finance to expand the business

A cash flow shortage in a business is often solved by arranging

• An overdraft

• A loan

• Crowdfunding

• Selling shares

Net cash flow is calculated by

• Adding the closing balance to the opening balance

• Adding total inflows to total outflows

• Taking total outflows from total inflows

• Taking the closing balance from the opening balance

What is the net cash flow?

• -£16,000

• -£7,000

• £12,000

• £26,000

What is the closing balance?

• -£12,000

• -£2,000

• £9,000

• £26,000

Which 2 are examples of cash inflows

• Bank loans

• Raw materials

• Receipts

• Suppliers

• Wages

Which 2 of the following could lead to improved cash flow?

• Complete market research

• Improve sales

• Negotiate lower prices with suppliers

• Employ extra staff

Which of the following is a cash inflow?

• Payments to suppliers

• Purchasing assets

• Longer credit terms for customers

• Taking out a bank loan

What is the closing balance at the end of the month?

• -£14,000

• -£4,000

• £24,000

• £38,000

Which of the following best describes negative cash flow?

• Cash inflow exceeds cash outflow

• Revenue is greater than costs

• Cash outflow exceeds cash inflow

• Costs are greater then revenue