Y10 Business Studies - C23 Cash Flow Forecast & Working Capital

What is the primary importance of cash to a business?

• It is a fixed asset.

• It is a liability.

• It is a liquid asset.

• It is a long-term investment.

What does a cash flow forecast estimate?

• Total assets of a business.

• Current cash balance.

• Future cash inflows and outflows.

• Future profits of a business.

What is the cash flow cycle?

• The stages between cash outflows and inflows.

• The method of increasing sales.

• The process of selling assets.

• The calculation of net profit.

What is a major reason for businesses failing?

• Low employee turnover.

• Excessive profits.

• Insolvency due to cash flow issues.

• High inventory levels.

Which of the following is NOT a cash inflow?

• Borrowing money.

• Sale of product by cash.

• Paying wages.

• Payment by debtor.

What does working capital refer to?

• Cash reserves only.

• Capital available for day-to-day expenses.

• Long-term investments.

• Total assets minus liabilities.

What is one way to overcome a short-term cash flow problem?

• Hiring more employees.

• Reducing sales.

• Delaying payment to suppliers.

• Increasing inventory levels.

What is the formula for calculating working capital?

• Cash inflow - Cash outflow.

• Total assets - Total liabilities.

• Current assets - Current liabilities.

• Current assets + Current liabilities.

What can happen if a business has too little cash?

• It can increase profits.

• It can pay off all debts.

• Production may stop.

• It can expand rapidly.

What is a limitation of increasing a bank loan?

• It provides immediate cash.

• Interest must be paid.

• It reduces cash outflow.

• It increases working capital.