Cash Flow
Aperçu
A builder in Lahore has three contracts signed, a full order book and a profit margin he is pleased with. On the twelfth of the month he cannot pay his bricklayers, because the developer who owes him 1.4 million rupees pays sixty days after each stage is certified and the certification is late. His bricklayers do not want to hear about certification. They want Friday's wages, and if they do not get them they will work for somebody else on Monday. He is profitable and he is in serious trouble, and those two facts are not in conflict.
This lesson is about the difference between those two facts. You will learn what cash flow is and why a business can be profitable and still fail, work through the four lines of a cash flow forecast until reading one is automatic, and practise the exact calculation the papers set: total outflows, net cash flow, closing balance. Then you will weigh the five solutions the specification names for a business in difficulty. One warning taken directly from a mark scheme: a cash flow difficulty does not mean the business is unprofitable, and an answer that says it does has its mark capped.
Objectifs
- Importance of cash to businesses.
- Interpreting cash flow forecasts.
- Difference between cash and profit.
Carte mentale
Ce theme est schematise pour montrer comment les idees se relient.
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Note de cours
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Évaluation de la leçon
Félicitations, vous avez terminé la leçon sur Cash Flow. Maintenant que vous avez exploré le concepts et idées clés, il est temps de mettre vos connaissances à lépreuve. Cette section propose une variété de pratiques des questions conçues pour renforcer votre compréhension et vous aider à évaluer votre compréhension de la matière.
Vous rencontrerez un mélange de types de questions, y compris des questions à choix multiple, des questions à réponse courte et des questions de rédaction. Chaque question est soigneusement conçue pour évaluer différents aspects de vos connaissances et de vos compétences en pensée critique.
Utilisez cette section d'évaluation comme une occasion de renforcer votre compréhension du sujet et d'identifier les domaines où vous pourriez avoir besoin d'étudier davantage. Ne soyez pas découragé par les défis que vous rencontrez ; considérez-les plutôt comme des opportunités de croissance et d'amélioration.
- A business has an opening balance of 18,000, cash inflows of 52,000 and cash outflows of 61,000. What is its closing balance? A. 9,000 B. 27,000 C. 71,000 D. negative 9,000 Answer: A
- Which one of the following is a cash inflow but not revenue? A. Cash taken from customers in the shop B. Money received from a bank loan C. Payment from a credit customer for goods sold D. Rent received from a tenant Answer: B
- Which one of the following best describes a cash flow difficulty? A. The business is making a loss B. The business cannot pay its debts when they fall due C. The business has too much stock D. The business has borrowed too little Answer: B
- A business buys a delivery van for 300,000 in cash. What is the immediate effect? A. Profit falls by 300,000 and cash falls by 300,000 B. Cash falls by 300,000 but profit is reduced only by the amount the van wears out C. Neither cash nor profit changes D. Profit falls by 300,000 but cash is unchanged Answer: B
- Which one of the following would improve a business's cash flow in the shortest time? A. Applying for a government grant B. Issuing new shares C. Asking customers to pay on delivery instead of in 30 days D. Building a new factory Answer: C
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