Cah Flow Forecast

Question 1

Benefit of cash flow forecast

Answer 1

Identify problems in advance to secure other finance

Question 2

Disadvantage of cash flow forecast

Answer 2

Assumes all products are sold

Could be external factors (eg brexit)

Question 3

3 steps to answer

Answer 3

Knowledge
Application (case study)
Explanation

Question 4

Cash flow forecast definition

Answer 4

Estimate of amount of income and expenditure

Question 5

What does positive net cash flow mean

Answer 5

Flow of money in to bank account is greater than flow out

Question 6

How can a forecasted problem be prevented?

Answer 6

Increase income (loan)
Reduce expenditure (negotiate)
Trade credit (ask for delayed payment)

Question 7

What will a constant negative cash flow mean?

Answer 7

Go out of business as you cannot afford expenses