Cash Flow Forecasting and Working Capital Quiz

Why is cash important for a business?

• It helps in making long-term investments.

• It is required to pay short-term obligations.

• It allows for better marketing strategies.

• It increases the company's profit margin.

What are cash inflows?

• Payments made to suppliers.

• Sums of money received by the business.

• Salaries paid to employees.

• Expenses incurred by the business.

Which of the following is NOT a cash outflow?

• Repaying loans.

• Paying wages.

• Purchasing goods for cash.

• Receiving payments from debtors.

What does a cash flow forecast estimate?

• The number of employees needed.

• The total assets of the business.

• Future cash inflows and outflows.

• Future profits of the business.

What is the formula for Net Cash Flow?

• Total Assets - Total Liabilities

• Total Cash Inflow + Total Cash Outflow

• Total Cash Inflow - Total Cash Outflow

• Opening Cash Balance + Closing Cash Balance

What is working capital?

• The total cash available for long-term investments.

• The capital required for day-to-day operations.

• The total revenue generated by the business.

• The amount of cash held in bank accounts.

Which of the following can help overcome cash flow problems?

• Increasing inventory levels.

• Reducing sales prices.

• Delaying payments to suppliers.

• Hiring more employees.

What is a potential consequence of delaying payments to suppliers?

• Suppliers may refuse to supply on credit.

• Improved cash flow.

• Increased discounts for early payments.

• Higher customer satisfaction.

What does a negative cash flow indicate?

• The business is making a profit.

• The business has more cash inflows than outflows.

• The business may run out of cash.

• The business is expanding rapidly.

What is one way to improve cash flow in the long term?

• Cutting down on marketing efforts.

• Reducing the number of products offered.

• Increasing inventory levels.

• Attracting more investors.