Cash flow - unit 3 - business finance

A firm purchased raw materials on account and paid for them within 60 days. The raw materials were used in manufacturing a finished goods sold on account 100 days after the raw materials were purchased. The customer paid for the finished good 30 days later. The firm’s cash conversion cycle is ________ days.

• 10

• 70

• 130

• 200

If a firm purchased goods on credit, the firm would usually pay the bill when?

• as soon as possible

• before the credit period ends

• on the last day of the credit period

What is start up capital?

• Finance needed before starting trading.
• Finance paid after trading.
• Finance paid to banks.

Profit is important to businesses because:

• it improves businesses, cash balances
• it can be used to measure business size
• it is a measure of businesses, success
• businesses need to pay taxes to the government

What is capital expenditure?

• Money spent for fixed assets which last about 6 months.
• Money spent for fixed assets which last about for more than a year.
• Money spent on a day-to-day basis.
• Money spent per hour rate.

What is asset?

• An item of property owned by a person or company
• An item owned by a business that lasts for several years.

What is revenue expenditure?

• Money spent on monthly expenses
• Money spent on hour to hour expenses
• Money spent on day to day expenses
• None of the above

What is NOT a source of Internal finance?

• Retained profit
• Sale of existing assets
• Issue of shares
• All are sources of Internal finance

The amount of cash moving into and out of a business

• Cash Flow

• Net Worth

Money received from a business investor would be an example of

• cash inflow

• cash outflow