Cashflow Forecasting

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Which ratio measures the liquidity risk of a business and its ability to generate cash to meet short-term financial commitments?

Debt to Equity Ratio

Overhead Rate

Labour Multiplier

Current Ratio (correct)

Which ratio measures whether a business is comfortable handling its debt obligations?

Current Ratio

Labour Multiplier

Debt to Equity Ratio (correct)

Overhead Rate

What is the formula for the current ratio?

Net revenue divided by direct labour costs

Current assets divided by current liabilities (correct)

Total overhead including indirect labour divided by direct labour costs

Total liabilities divided by shareholders’ equity

What is the formula for the profit margin?

Net profit divided by net revenue x 100 Signup and view all the answers

Which of the following is the primary goal of financial management in an architectural practice?

To achieve and sustain profits Signup and view all the answers

What is the formula for calculating profit in a business?

Revenue minus expenses Signup and view all the answers

What is the purpose of setting aside a percentage of profit as a capital reserve?

To cover expenses in lean years Signup and view all the answers

Why is financial planning important in an architectural practice?

To guide strategic decisions Signup and view all the answers

Which of the following statements accurately describes the Average Collection Period (ACP)?

ACP measures the average number of days it takes to receive payment from the invoice date. Signup and view all the answers

Which of the following is a component of the Balance Sheet?

Current Assets Signup and view all the answers

What does the term 'Accounts Payable' refer to?

A record of accounts of money payable to consultants and to other suppliers for expenses. Signup and view all the answers

Which type of accounting is done within the architectural practice?

Internal accounting Signup and view all the answers

Which type of accounting includes the preparation and examination of financial statements to express an opinion on the financial position of the practice?

External accounting Signup and view all the answers

What is the highest level of assurance provided by an external accountant?

Audit Signup and view all the answers

Which accounting system records all income and expenses as they occur in the general ledger?

Accrual system Signup and view all the answers

Which financial statement shows the financial position of a company at a given period?

Balance Sheet Signup and view all the answers

Which financial statement focuses on profitability and growth?

Income Statement Signup and view all the answers

Which financial statement is used to understand how to realize profit into cash?

Cashflow Statement Signup and view all the answers

Which financial statement is a detailed explanation of the change in cash on the balance sheet?

Cashflow Statement Signup and view all the answers

Which of the following is a reason why a well-prepared cashflow projection may be necessary for negotiating a line of credit with the bank?

To accurately monitor and control expenses Signup and view all the answers

What can an accountant provide advice on in relation to banks approving loans and lines of credit?

Information required by banks Signup and view all the answers

In what chapter of the text can you find information on various methods of compensation or fee calculation?

Chapter 3.9 - Architectural Services and Fees Signup and view all the answers

Which of the following is NOT a responsibility of an accountant in an architect practice?

Designing architectural plans Signup and view all the answers

What should be considered when preparing a cashflow forecast?

The architect's payment history Signup and view all the answers

What is the role of a Chartered Professional Accountant (CPA) in an architect practice?

Adhering to professional standards Signup and view all the answers

When is the best time to negotiate for a line of credit with a bank?

When financing is not required Signup and view all the answers