Forecasting Cashflow

What is meant when a business is said to be insolvent?

• It is no longer profitable

• It cannot meet its short-term debts.

• Sales revenue is declining.

• It has surplus.

Which of the following is an example of cash outflow?

• trade payable (creditor) payments

• trade receivable (debtor) payments

• credit sales

• credit purchases

Which of the following statements is true?

• Cash flow and profit are always equal.

• Profit must equal cash inflow less cash outflow.

• Profit is costs less revenue.

• Net cash flow equals cash inflow less cash outflow.

Which one of the following would not be included in a cash-flow forecast?

• estimated future depreciation

• estimated future payments for raw materials

• planned injection of capital into the business from the owner

• estimated cash purchases by customers

Which of the following is least likely to improve the short-term cash position of a business?

• arranging an overdraft

• reducing credit terms to customers

• cutting overhead spending

• increasing promotion to increase sales