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WorksheetsChapter 20 - Cash Flow Forecasting and Management Quiz
Total questions: 32
Worksheet time: 16mins
What does a cash flow forecast show?
The total profit a business makes
The inflows and outflows of cash over a period of time
The value of assets a business owns
The amount of debt a business has
Which of the following is an example of a cash inflow?
Paying wages to employees
Buying new equipment
Receiving a bank loan
Paying rent
What happens if the closing balance of a business is negative?
The business has made a profit
The business has more cash outflows than inflows
The business has no expenses
The business has no liabilities
A business receives $20,000 from sales and $5,000 from a bank loan. It spends $10,000 on expenses. What is the net cash flow?
$15,000
$25,000
$10,000
$5,000
Why might a business experience cash flow problems?
Customers pay late
The business has too much profit
The business lowers its expenses
The business receives a large investment
What is the formula for calculating net cash flow?
Cash inflows – Cash outflows
Opening balance + Cash inflows
Cash outflows – Cash inflows
Closing balance – Opening balance
A company has an opening balance of $3,000, total cash inflows of $8,000, and total outflows of $5,000. What is the closing balance?
$11,000
$5,000
$6,000
$3,000
What is an advantage of preparing a cash flow forecast?
It guarantees higher profits
It helps the business plan for future cash shortages
It reduces the need for sales revenue
It removes the risk of bad debts
Which of the following is a cash outflow?
Selling goods to customers
Receiving an investment from an owner
Paying suppliers for raw materials
Taking out a loan
What can a business do to improve cash flow?
Offer discounts for early payments
Increase expenses
Stop selling goods on credit
Delay payments to suppliers forever
What does a positive net cash flow indicate about a business?
The business has more cash outflows than inflows
The business has more cash inflows than outflows
The business is making a profit
The business is experiencing liquidity problems
Liquidity refers to:
How quickly a business can pay off its short-term debts
The amount of profit a business makes
The value of long-term assets a business owns
The number of employees in a company
How can a business improve its net cash flow?
Increase cash inflows and reduce cash outflows
Borrow more money without reducing expenses
Sell goods on credit to more customers
Delay payments to suppliers indefinitely
What is a disadvantage of selling goods on credit?
It improves liquidity immediately
It delays cash inflows, causing potential cash flow problems
It increases immediate revenue and profit
It reduces the need for working capital
Which of the following is a way to improve liquidity in a business?
Investing in more long-term assets
Selling products on long-term credit
Reducing the time taken for customers to pay invoices
Increasing wages for employees
How can reducing inventory levels improve working capital?
It reduces storage costs and frees up cash for other uses
It increases the number of goods available for sale
It leads to higher long-term asset values
It ensures a business has more stock at all times
A business has $10,000 in current assets and $4,000 in current liabilities. What is its working capital?
$4,000
$10,000
$6,000
$14,000
Which of the following is an example of a government grant?
A business receiving a loan from a bank
A business receiving money from the government that does not need to be repaid
A business issuing shares to raise capital
A business receiving payment from customers
Why might a government provide grants to businesses?
To help businesses increase their profit margins
To encourage economic growth and job creation
To reduce competition in the market
To ensure all businesses pay more taxes
What impact does poor working capital management have on a business?
It ensures the business has enough cash to cover short-term expenses
It can lead to cash shortages and difficulty paying suppliers
It guarantees higher profits and increased sales
It improves the ability to invest in long-term assets
A business has the following financial data for April:
Cash inflows: Sales revenue ($18,000),
Government grant ($2,000)
Cash outflows: Rent ($5,000), Wages ($7,000), Supplies ($3,000)
Opening balance: $4,000
Calculate the total cash inflow for April.
$18,000
$20,000
$21,000
$22,000
A business has the following financial data for April:
Cash inflows: Sales revenue ($18,000),
Government grant ($2,000)
Cash outflows: Rent ($5,000), Wages ($7,000), Supplies ($3,000)
Opening balance: $4,000
Calculate the total cash outflow for April.
$15,000
$13,000
$10,000
$9,000
A business has the following financial data for April:
Cash inflows: Sales revenue ($18,000),
Government grant ($2,000)
Cash outflows: Rent ($5,000), Wages ($7,000), Supplies ($3,000)
Opening balance: $4,000
Determine the net cash flow for April.
$7,000
$5,000
$10,000
$6,000
A business has the following financial data for April:
Cash inflows: Sales revenue ($18,000),
Government grant ($2,000)
Cash outflows: Rent ($5,000), Wages ($7,000), Supplies ($3,000)
Opening balance: $4,000
Calculate the closing balance for April.
$9,000
$10,000
$8,000
$7,000
What is the formula for calculating net cash flow?
Total cash inflows + Total cash outflows
Total cash inflows – Total cash outflows
Opening balance – Closing balance
Profit – Expenses
A business has total current assets of $12,000 and total current liabilities of $5,000. What is its working capital?
$7,000
$17,000
$5,000
$12,000
Why might a business offer credit sales to customers?
To immediately increase cash inflows
To encourage more customers to buy, even if payment is delayed
To avoid the risk of bad debts
To reduce the need for working capital
How does reducing inventory levels improve cash flow?
It reduces storage costs and frees up cash
It increases the number of products available
It ensures the business has more stock at all times
It makes suppliers charge higher prices
What is a government grant?
Money given by the government that must be repaid with interest
Money provided by the government that does not need to be repaid
A loan from a bank to support a new business
A business investment from private companies
What does liquidity mean in a business?
The ability to pay off short-term debts
The ability to sell assets at a higher price
The ability to increase total revenue
The amount of profit made in a year
If a business has poor working capital, which problem might it face?
Increased ability to invest in long-term projects
Difficulty paying suppliers and short-term expenses
Higher profit margins
Increased customer satisfaction
How can a business improve its net cash flow?
Reduce unnecessary expenses
Increase inventory purchases
Offer more credit sales without restrictions
Increase employee wages without increasing revenue
