L2 Cash Flow Forecasting Quiz

What is cash flow forecasting?

• Balancing a checkbook

• Predicting future money in and out

• Recording past financial transactions

• Calculating profit margins

What is the primary purpose of cash flow forecasting?

• To predict liquidity needs

• To determine employee salaries

• To calculate taxes

• To set product prices

What does a positive cash flow indicate?

• Equal cash inflows and outflows

• More cash outflows than inflows

• More cash inflows than outflows

• No cash movement

Which of the following is a cash inflow?

• Utility bill

• Sales revenue

• Salary payment

• Loan repayment

What is working capital?

• Difference between current assets and liabilities

• Total expenses of a business

• Total revenue of a business

• Net profit of a business

What is the difference between cash and profit?

• Cash is an asset; profit is a liability

• Cash is a loan; profit is income

• Cash is revenue; profit is expenses

• Cash is actual money available; profit is financial gain after expenses

What does a negative cash flow cycle indicate?

• Cash outflows exceed inflows

• Cash inflows exceed outflows

• Equal cash inflows and outflows

• No cash movement

What is the cash conversion cycle?

• Time to calculate taxes

• Time to convert investments into cash

• Time to repay a loan

• Time to hire new employees

Which of the following is a strategy to improve cash flow?

• Increase inventory purchases

• Delay customer payments

• Increase the amount of money going out

• Increase the amount of money coming in

What is the significance of a cash flow forecast?

• Ensures liquidity and helps in planning for future growth

• Sets product prices

• Calculates annual taxes

• Determines employee bonuses