Economics B 1.6.4

What is the purpose of cash-flow forecasts?

• To show how much cash a business will spend in a given period.

• To prepare for the future by showing how much cash will be coming in and out of a business over a specific period.

• To record the past financial transactions of a business.

• To calculate the total sales of a business for the year.

By the end of December, what is the closing balance forecasted for Sunny Side Up Ltd?

• £0

• £-80,000

• £-75,000

• £140,000

According to the forecast, in which months does Sunny Side Up Ltd make more sales?

• Spring and summer months

• Autumn and winter months

• Only in December

• Throughout the year evenly

How is the closing balance of each month calculated for Sunny Side Up Ltd?

• By adding TOTAL OUTFLOW to TOTAL INFLOW.

• By subtracting TOTAL OUTFLOW from TOTAL INFLOW.

• By multiplying TOTAL INFLOW with TOTAL OUTFLOW.

• By dividing TOTAL INFLOW by TOTAL OUTFLOW.

Which of the following is a limitation of cash-flow forecasts?

• They provide exact data for future expenses and revenues.

• They are less accurate over long periods of time.

• They ensure businesses can rely solely on the forecast.

• They account for competitors changing the market.

What is a benefit of using cash-flow forecasts for businesses?

• They allow businesses to make large investments without risk.

• They show when cash will be tight and help in negotiations over finance.

• They guarantee the cash available to pay suppliers.

• They provide a precise prediction of the climate's impact on sales.

What does the term 'Sales forecast' refer to?

• The number of units sold.

• The amount of cash consumers have available to spend.

• A prediction of the sales a company will make in the next period (e.g. six months).

• The sum of fixed and variable costs.

What is the definition of 'Break-even'?

• The point where total costs of producing a good/service and the amount of revenue earned meet.

• The number of units sold.

• The amount of cash generated by selling products.

• The difference between the variable costs of producing a good/service and the amount of revenue a company earns from selling it.

What would be the closing balance for February?

• 80

• 150

• 30

• -50