IGCSE Business Ch 23 Cash Flow Forecasting and Working Capital

What does a cash flow forecast predict?

• Profits of a business

• Cash inflows and outflows over a period

• Expenses of a business

• Assets and liabilities

True or False:

A business can run out of cash even if it is making profits.

• True

• False

Which of these is an example of a cash inflow?

• Paying suppliers

• Loan repayment

• Customer receipts

• Staff wages

What is working capital?

• Revenue minus expenses

• Cash inflow minus cash outflow

• Long-term investments

• Money available for day-to-day costs

Which of these would likely cause a cash flow problem?

• Customers paying on credit

• Strict inventory management

• High cash balances

• Selling assets

True or False:

Delayed payments to suppliers can lead to a cash flow shortage.

• True

• False

What is the purpose of maintaining working capital?

• To fund long-term investments

• To manage daily expenses

• To calculate profit

• To forecast sales

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

• Cash sales

• Interest payments on a loan

• Receiving payments from debtors

• Taking a new loan

How can a business improve its cash flow position?

• Allow credit to customers

• Reduce inventory levels

• • Decrease cash sales

• Increase cash purchases

A business expects cash inflows of $10,000 in January and cash outflows of $12,000.

What is the cash flow position for January?

• $2,000 surplus

• $2,000 deficit

• Break-even

• $10,000 surplus