EQUATIONS Flashcards
(55 cards)
What is cash flow?
Cash flow is the total amount of money being transferred into and out of a business.
True or False: Positive cash flow means a business has more money coming in than going out.
True
What formula is used to calculate cash flow?
Cash Flow = Total Inflows - Total Outflows
Fill in the blank: Cash inflows include ______.
sales revenue, loans, and investments
What are cash outflows?
Cash outflows are the money that exits the business, such as expenses, loan repayments, and purchases.
True or False: A business can be profitable but still have negative cash flow.
True
What is net cash flow?
Net cash flow is the difference between cash inflows and cash outflows over a specific period.
What does a cash flow forecast help a business to do?
It helps a business predict future cash flow needs and manage finances effectively.
Multiple choice: Which of the following is NOT a cash inflow? A) Sales Revenue B) Loan Proceeds C) Rent Expense
C) Rent Expense
What is a cash flow statement?
A cash flow statement is a financial document that summarizes the amount of cash entering and leaving a company.
Fill in the blank: The three main sections of a cash flow statement are operating activities, ______, and financing activities.
investing activities
True or False: Cash flow is the same as profit.
False
What is the purpose of monitoring cash flow?
To ensure that a business has enough liquidity to meet its obligations and avoid insolvency.
Multiple choice: Which of the following would be considered a cash outflow? A) Paying suppliers B) Receiving a loan C) Selling an asset
A) Paying suppliers
What is a cash flow positive situation?
When a company has more cash inflows than outflows, resulting in a surplus.
Fill in the blank: Cash flow problems can lead to ______ for a business.
bankruptcy
What is the importance of cash flow in business operations?
It ensures that the business can pay its bills, invest in growth, and sustain operations.
True or False: Seasonal businesses experience consistent cash flow throughout the year.
False
What is the impact of delayed payments on cash flow?
Delayed payments can create cash flow shortages and hinder a business’s ability to operate smoothly.
Multiple choice: Which of the following can improve cash flow? A) Increasing sales B) Reducing expenses C) Both A and B
C) Both A and B
What does it mean to have negative cash flow?
It means that a business’s cash outflows exceed its cash inflows over a specific period.
Fill in the blank: To maintain positive cash flow, businesses must manage their ______ effectively.
receivables and payables
What is working capital?
Working capital is the difference between a company’s current assets and current liabilities.
True or False: A cash flow statement includes non-cash transactions.
False
