12 Questions
Why is managing cash flow crucial for a business?
To meet daily financial requirements
What is the most common cause of business failure according to the text?
Negative cash flow
How does negative cash flow impact a business's relationship with suppliers?
Suppliers may reduce the length of the credit period
Why is it difficult for a business with uncontrolled cash to take advantage of bulk buying?
It creates missed opportunities for expansion
What happens if a business borrows from banks to cover cash shortages?
Additional interest charges are incurred
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
What is one way a business can improve cash flow according to the text?
Leasing equipment instead of purchasing it
What does factoring involve in relation to cash flow management based on the text?
Paying the seller 80% upfront and 20% later
Which strategy is suggested in the text for controlling stock losses to improve cash flow?
Implementing a just-in-time system
What can help businesses keep cash in the business, according to the text?
Leasing rather than purchasing equipment
How can a business manage outflow of cash according to the text?
Delaying payment of bills
What is a possible consequence of a business being short of working capital?
Difficulty in achieving growth
Learn about the importance of managing cash flow to ensure there is enough cash available to meet requirements at any given time. Understand how negative cash flow can lead to business failure, and why managing cash flow is a vital and continuous process in business operations.
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