Y8 Business Studies - C7 Cash Flow Planning

What does cash flow mean?

• The flow of money in and out of a business

• The profit made by a business

• The total assets of a business

• The amount of debt a business has

What is a cash inflow?

• The total profit of a business

• The amount of cash held by a business

• The flow of cash out of a business

• The flow of cash into a business

Which of the following is an example of a cash outflow?

• Sale of goods for cash

• Payment of wages

• Borrowing from a bank

• Investment from investors

What is a creditor?

• Someone who lends you money

• Someone who buys goods from you

• Someone who invests in your business

• Someone who provides services to you

What happens when a company is short on cash?

• It will always make a profit

• It may lose customers to competitors

• It can pay all its debts

• It can easily borrow money

What is the formula for cash flow?

• Cash flow = Cash inflow - Cash outflow

• Cash flow = Cash inflow + Cash outflow

• Cash flow = Assets - Liabilities

• Cash flow = Profit - Expenses

What is insolvency?

• When a business is making a profit

• When a business cannot pay its debts

• When a business has too much cash

• When a business is expanding

What can a cash flow forecast help a manager determine?

• What products to sell

• How many employees to hire

• How much cash is available for paying bills

• How much profit the business will make

Why is it important to keep the bank manager informed?

• To show the bank the firm's repayment ability

• To ask for a higher interest rate

• To get advice on marketing

• To reduce the number of loans

What should a business do if it has too much cash?

• Repay loans to reduce interest

• Invest in more inventory

• Save it for future expenses

• Increase salaries for employees