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Cash Flow Management in Business

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Questions and Answers

Why is managing cash flow crucial for a business?

To ensure a constant fluctuation in available funds

To increase average costs through missed opportunities

To meet daily financial requirements (correct)

To prevent banks from imposing high interest rates

What is the most common cause of business failure according to the text?

Missed opportunities for bulk buying

Expanding the business too quickly

Negative cash flow (correct)

Delayed payments to suppliers

How does negative cash flow impact a business's relationship with suppliers?

It increases the credit period for future orders

It leads to a reduction in interest charges

Suppliers may reduce the length of the credit period (correct)

It ensures a constant supply of stock

Why is it difficult for a business with uncontrolled cash to take advantage of bulk buying?

It creates missed opportunities for expansion Signup and view all the answers

What happens if a business borrows from banks to cover cash shortages?

Additional interest charges are incurred Signup and view all the answers

Why is it important for a business to ensure there are sufficient funds when taking on a special order?

To make sure there are enough funds available Signup and view all the answers

What is one way a business can improve cash flow according to the text?

Leasing equipment instead of purchasing it Signup and view all the answers

What does factoring involve in relation to cash flow management based on the text?

Paying the seller 80% upfront and 20% later Signup and view all the answers

Which strategy is suggested in the text for controlling stock losses to improve cash flow?

Implementing a just-in-time system Signup and view all the answers

What can help businesses keep cash in the business, according to the text?

Leasing rather than purchasing equipment Signup and view all the answers

How can a business manage outflow of cash according to the text?

Delaying payment of bills Signup and view all the answers

What is a possible consequence of a business being short of working capital?

Difficulty in achieving growth Signup and view all the answers

Cash Flow Management in Business

Choose a study mode

Podcast

Questions and Answers

Why is managing cash flow crucial for a business?

What is the most common cause of business failure according to the text?

How does negative cash flow impact a business's relationship with suppliers?

Why is it difficult for a business with uncontrolled cash to take advantage of bulk buying?

What happens if a business borrows from banks to cover cash shortages?

Why is it important for a business to ensure there are sufficient funds when taking on a special order?

What is one way a business can improve cash flow according to the text?

What does factoring involve in relation to cash flow management based on the text?

Which strategy is suggested in the text for controlling stock losses to improve cash flow?

What can help businesses keep cash in the business, according to the text?

How can a business manage outflow of cash according to the text?

What is a possible consequence of a business being short of working capital?

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