Cash Flow

The meaning of cash flow is:

• The total amount of money being transferred into and out of a business.

• The profit earned by a business after all expenses.

• The amount of cash a business has on hand at any given time.

• The total revenue generated by a business.

Distinguish between cash and profit.

• Cash is the total amount of money a company has on hand, while profit is the amount of money left after all expenses are paid.

• Cash is the amount of money left after all expenses are paid, while profit is the total amount of money a company has on hand.

• Cash and profit are the same and can be used interchangeably.

• Cash is the amount of money a company owes, while profit is the amount of money a company owns.

The uses and limitations of cash flow forecast include:

• Helps in budgeting and financial planning, but may not account for unexpected expenses.

• Ensures profitability, but does not help in financial planning.

• Guarantees financial success, but is time-consuming to prepare.

• Is only useful for large corporations, not small businesses.

Producing cash flow forecasts involves:

• Analyzing past financial data and predicting future cash flows

• Guessing future sales without any data

• Ignoring past financial trends

• Only considering current expenses

The causes of cash flow problems are:

• Poor financial planning

• High profitability

• Excessive savings

• Low expenses

Solutions recommended for cash flow problems include:

• Increasing sales revenue

• Reducing expenses

• Improving inventory management

• All of the above

The link between cash flow and working capital is:

• Cash flow affects the liquidity available for working capital.

• Working capital determines the cash flow of a company.

• There is no link between cash flow and working capital.

• Cash flow and working capital are the same.

What solutions can be recommended for working capital problems?

• Increase sales revenue

• Reduce operational costs

• Improve inventory management

• All of the above

Fill in the blank: Cash flows out on buying ________.

• Cash flows out on buying an asset.

• Cash flows out on buying a liability.

• Cash flows out on buying an expense.

• Cash flows out on buying a service.

Keeping a check on cash flow is important because:

• it ensures liquidity and financial stability.

• it increases the amount of cash on hand.

• it eliminates the need for budgeting.

• it guarantees profit.