WorksheetsCASH FLOW BUDGETING
Total questions: 15
Worksheet time: 27mins
Cash flow budgeting primary purpose is to estimate the (a) of future borrowing needs and the ability of the business to repay loans.
Cash inflows come from the following transaction EXCEPT
New loans
Sales
Taxes
Subsidy
The following are true about general uses of cash EXCEPT
Farm operating expenses, the normal and usual cash expenses incurred in producing the farm revenue
Capital purchases, the partial purchase price of any new capital assets
Nonbusiness and other expenses, which would include cash used for living expenses, income etc
Principal payments on debt
A (a) contains estimates of cash flows for a future time period.
Select the correct statements regarding the uses of cash flow budget (can choose more than one answer)
Aid tax payment
Plan purchases to obtain discounts
Suggest ways to maximize borrowing
Plan borrowing and debt repayment
Why it is important to monitor actual cash flows?
Control the values computed in the cash flow budget
Easier to compute the balance sheet statement
Makes it easy to put together the annual financial statement for businesses.
To make adjustments for cash flow budget next year
"Easy to calculate and identifies the investments with the most immediate cash returns but ignores returns after the end of the payback period as well as the timing of cash flows".
The statement describes ______
Internal rate of return
Simple internal rate of return
Payback period
Net present value
______ is the sum of the present values of each year’s net cash flow minus the initial investment
Internal rate of return
Simple rate of return
Payback period
Net present value
Choose the best investment based on the following decision
Longer payback period
Higher NPV
Lower simple rate of return
_____ is number of years it would take for an investment to return its original costs through the net cash guaranteed
Internal rate if return
Simple rate of return
Payback period
Net present value
Investment analysis involves the following tools EXCEPT
Return on investment
Simple rate of return
Payback period
Net present value
Keeping good records of actual cash flows is important for several reasons EXCEPT
Provide useful insight into financial structure of the business and
If cash flow records are recorded and summarizes monthly, the monthly cash flow can be compared with monthly budgeted values at the end of each year.
Provide a good starting point for developing the next annual cash flow budget
Show how the operating, financing, and investing activities combine and interact as sources and uses of cash
Original cost : $20,000, discount rate : 10%
Project A inflow : RM 5,000 per year for 5 years
Calculate the payback period
(a)
Original cost : $20,000, discount rate : 10%
Project A inflow : RM 5,000 per year for 5 years
Terminal value : RM 3,000
Calculate the simple rate of return for project A
(a)
Original cost : $15,000, discount rate : 10%
Project A inflow : RM 5,000 per year for 5 years
Calculate the net present value
(a)
