Podcast
Questions and Answers
Which of the following best describes a cash flow forecast?
Which of the following best describes a cash flow forecast?
Increasing prices will always improve a business's cash flow position.
Increasing prices will always improve a business's cash flow position.
False (B)
Besides increasing sales, what is one way a business can improve its cash flow position?
Besides increasing sales, what is one way a business can improve its cash flow position?
Cutting costs
A cash flow forecast helps identify the timing of cash ______ and surpluses.
A cash flow forecast helps identify the timing of cash ______ and surpluses.
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Which stakeholder is most concerned with a business's ability to afford wage increases?
Which stakeholder is most concerned with a business's ability to afford wage increases?
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A cash flow forecast is mainly useful for businesses that are seeking to raise finance.
A cash flow forecast is mainly useful for businesses that are seeking to raise finance.
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What might a business risk if they cut raw material costs by choosing a new supplier?
What might a business risk if they cut raw material costs by choosing a new supplier?
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Match the following stakeholders with their primary interest in a business's accounts:
Match the following stakeholders with their primary interest in a business's accounts:
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Which of these actions could potentially increase a business's sales?
Which of these actions could potentially increase a business's sales?
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Reducing the use of outside contractors will definitely save a company money.
Reducing the use of outside contractors will definitely save a company money.
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What might a customer want to know about the survival of a business?
What might a customer want to know about the survival of a business?
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Inviting new shareholders to inject money into the business may lead to a dilution of ______.
Inviting new shareholders to inject money into the business may lead to a dilution of ______.
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Match the following business actions with their potential impact:
Match the following business actions with their potential impact:
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What is the net cash flow if total receipts are 2500 and total payments are 16920?
What is the net cash flow if total receipts are 2500 and total payments are 16920?
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A successful business will not impact the value of shares.
A successful business will not impact the value of shares.
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Besides customers, what other two groups may have interest in the survival of the business?
Besides customers, what other two groups may have interest in the survival of the business?
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Study Notes
Cash Flow Forecasting
- Definition: A prediction of cash movement into and out of a business over a period of time.
- Useful for: Identifying cash shortages/surpluses, planning, problem identification, securing finance, and assessing new ventures.
Improving Cash Flow
- Increased sales & marketing campaigns (might not work during economic downturns).
- Price increases (dependent on price elasticity of demand).
- Wage reduction (could lead to staff shortages or labor disputes).
- Cost reduction (e.g., materials, contractors).
- Debt collection (can strain customer relations).
- Promotion strategies (impact on sales uncertain).
Stakeholders & Business Accounts
- Directors: Assessing past strategies & future decisions.
- Workers: Business success impacting job security & wages.
- Managers: Success affecting salary increases, bonuses, and management effectiveness.
- Shareholders/Investors: Business performance affecting share price and dividends.
- Customers: Concern about business survival; possible negotiating prices.
- Suppliers: Assessing business stability & payment potential.
- Banks: Assessing business survival and creditworthiness.
- Government: Tax collection and business profitability.
- Competitors: Analysis & strategy based on competitor's actions.
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Description
This quiz explores the essential concepts of cash flow forecasting, including its definition and the importance of predicting cash movements for business decision-making. Additionally, it discusses various strategies for improving cash flow and examines the roles of different stakeholders in this financial process.
