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Worksheets1.3.3 - Cash and cash-flow
Total questions: 13
Worksheet time: 10mins
For a future time period, a cash-flow forecast predicts :
The profit or loss a business will make
The break even level of output
The money flowing into and out of the business
The margin of safety
Which one of the following statements is true in relation to cash-flow and/or profit?
Cash-flow and profit have the same meaning in business
Businesses should always be more concerned about profit than cash
The profit figure is always shown in the cash-flow forecast
A positive cash flow is important to ensure business survival
A negative figure on the closing balance of a cash-flow forecast is called a:
Surplus
Profit
Deficit
Loss
The correct formula to calculate net cash flow in a cash-flow forecast is:
Total cash inflows – total cash outflows in a given period
Total cash outflows – total cash inflows in a given period
Opening balance - closing balance
Opening balance + closing balance
An extract from a business’ cash-flow forecast for March is shown in the table below:
Based on this information, the opening balance for April will be:
(£4,333)
(£14,333)
£109,641
£119,641
Which one of the following is a reason why a business should construct a cash-flow forecast?
It informs owners if the business is making a profit/loss
It helps managers to prepare for any future cash shortfall
It enables managers to calculate the break even point
It enables the owners to assess past financial performance
A business has provided the following information for the months of September and October.
Using the information provided in the table, which one of the following represents the value of total payments as a percentage of cash receipts in September?
24.73%
32.05%
41.82%
60.53%
An extract from a business’ cash-flow forecast for June and July is shown in the table below:
Based on this information, the closing balance for July will be:
£98,000
£150,000
£174,000
£320,000
A business is experiencing cash flow problems. It currently has the following trade credit terms in operation with its suppliers and customers:
Based on this information, which of the following would be a suitable way for the business to improve its cash flow position?
Increase customer credit period and reduce supplier credit period
Reduce customer credit period and increase supplier credit period
Increase credit period with both customers and suppliers
Reduce credit period with both customers and suppliers
Below is an extract from a business’s cash-flow forecast.
Based on this information, the total receipts for January will be:
£70,000
£100,000
£130,000
£210,000
The table below shows financial information for four different business.
Based on this information, which one of the following businesses has the most favourable closing balance?
Business A
Business B
Business C
Business D
Which two of the following are benefits to a business of having a positive cash flow?
Select two answers:
The business will be guaranteed to make a profit
The business will no longer need to produce a cash-flow forecast
All employees in the business will be highly productive
It will help to prevent insolvency
It will help to secure business survival
Which two of the following are ways a business could improve its cash flow position?
Select two answers:
Increase overheads
Negotiate discounted prices with suppliers
Reduce receipts
Increase payments
Reduce stock levels in the business
