Understanding Cash and Profit in Business

What is the primary difference between cash and profit in a business context?

• Cash is the money you have now, while profit is the money earned after expenses.

• Cash and profit are the same in a business context.

• Cash is the money you owe, while profit is the money you have.

• Cash is the money earned after expenses, while profit is the money you have now.

Why is cash flow management crucial for a business?

• It is only important for large businesses.

• It helps in increasing the profit margin.

• It is not necessary if a business is profitable.

• It ensures that a business can meet its short-term financial obligations.

How can a business be profitable but still face cash flow problems?

• By having more profit than cash.

• By having no expenses.

• By having delayed payments from customers.

• By having more cash than profit.

In the furniture store example, what was the cash available after sales?

• £15,000

• £20,000

• £30,000

• £50,000

What financial issue might the furniture store face despite being profitable?

• Lack of sales

• Excessive profit

• Cash flow problem due to an unexpected bill

• Too much cash on hand