Cash Flow Forecast

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(suppliers)

• 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

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

The closing bank balance is calculated by:

• opening bank balance + cash out-flow
• opening bank balance + cash in-flow
• opening bank balance + net cash flow
• net cash flow + gross profit

The term _________ describes if a business is able to remain afloat by paying its overheads, wages, and expenses on time.

• Liquidity

• Solvency

• Conversion rate

• Working capital cycle

Which one of the following is an example of an outflow? 

• Capital 
• Bank Loan
• Wages 
• Government Grant

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.

What is the purpose of a cash flow forecast?

• To calculate profit or loss

• To find out whether a business has enough cash to pay their bills

• To find out when customers are going to pay their invoices

• To see if the business will break even