Podcast
Questions and Answers
Which of the following best describes a cash flow forecast?
Which of the following best describes a cash flow forecast?
- A statement of a business's assets and liabilities at a specific point in time
- An estimate of the movement of cash into and out of a business over a period of time (correct)
- A record of all the business's completed transactions
- A prediction of a business's revenue over a period of time
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.
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?
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.
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?
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:
Which of these actions could potentially increase a business's sales?
Which of these actions could potentially increase a business's sales?
Reducing the use of outside contractors will definitely save a company money.
Reducing the use of outside contractors will definitely save a company money.
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?
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 ______.
Match the following business actions with their potential impact:
Match the following business actions with their potential impact:
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?
A successful business will not impact the value of shares.
A successful business will not impact the value of shares.
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?
Flashcards
Cash Flow Forecast
Cash Flow Forecast
A prediction of the movement of cash into and out of a business over a period of time.
Uses of a Cash Flow Forecast
Uses of a Cash Flow Forecast
Helps identify where problems might occur and guides the business towards taking appropriate action.
Improve Cash Flow: Revenue
Improve Cash Flow: Revenue
Increase sales and marketing campaigns.
Improve Cash Flow: Costs
Improve Cash Flow: Costs
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Stakeholder Interest: Directors
Stakeholder Interest: Directors
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Stakeholder Interest: Workers
Stakeholder Interest: Workers
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Stakeholder Interest: Investors
Stakeholder Interest: Investors
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Stakeholder Interest: Managers
Stakeholder Interest: Managers
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Net Cash Flow
Net Cash Flow
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Reduce contractors
Reduce contractors
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Increasing promotions
Increasing promotions
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Cut advertising budget
Cut advertising budget
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Chasing-up bad debtors
Chasing-up bad debtors
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Invite new shareholders
Invite new shareholders
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Sale of assets
Sale of assets
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Re-negotiate terms of the loan
Re-negotiate terms of the loan
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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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