Question 1

How can a business improve its cashflow through accounts receivable management?

Accepted Answer

by promptly following up on late payments and implementing credit policies

Answer

by increasing inventory levels and hiring more employees

Answer

by offering discounts on all products and services

Answer

by expanding to new markets and acquiring more assets

Question 2

What are some common sources of cash inflow for a business?

Accepted Answer

sales revenue, investments, loans

Answer

employee wages, office rent, utilities

Answer

purchasing inventory, advertising expenses, taxes

Answer

charitable donations, volunteer work, sponsorships

Question 3

How does a negative cashflow impact a business?

Accepted Answer

It may lead to financial difficulties and inability to pay bills on time.

Answer

It boosts the business's revenue and profit margins.

Answer

It results in higher employee satisfaction.

Answer

It attracts more investors to the business.

Question 4

Why is it important for a business to manage its cashflow effectively?

Accepted Answer

to ensure the business can operate smoothly and avoid financial difficulties

Answer

to have a large amount of cash reserves

Answer

to maximize profits at all costs

Answer

to expand the business rapidly

Question 5

What is the difference between cashflow and profit in a business?

Accepted Answer

Cashflow is the amount of money moving in and out of a business, while profit is the amount of money left after subtracting expenses from revenue.

Answer

Cashflow is the amount of money left after expenses, while profit is the total revenue of a business

Answer

Cashflow is the amount of money moving in and out of a business, while profit is the amount of money borrowed by the business

Answer

Cashflow is the total revenue of a business, while profit is the amount of money moving in and out of a business

Question 6

Which of the following activities would likely improve a business's cashflow?

Accepted Answer

reducing unnecessary expenses

Answer

hiring more employees

Answer

extending credit terms to customers

Answer

increasing inventory levels

Question 7

Why is it important for a business to have a positive cashflow?

Accepted Answer

to ensure the business can meet its financial obligations

Answer

to expand the business internationally

Answer

to increase the number of employees

Answer

to improve the quality of products

Question 8

What does cashflow represent in a business?

Accepted Answer

the movement of money in and out of a business

Answer

the number of employees in a business

Answer

the value of assets in a business

Answer

the total profit of a business

Question 9

Why is it important for businesses to monitor their cashflow regularly?

Accepted Answer

To prevent cash shortages and financial crises

Answer

To attract more investors

Answer

To expand operations rapidly

Answer

To increase shareholder dividends

Question 10

What can a negative cashflow from operations indicate about a business?

Accepted Answer

Difficulty generating revenue or managing expenses

Answer

High profitability

Answer

Successful marketing campaigns

Answer

Strong customer loyalty

Question 11

What is the difference between cashflow and profit?

Accepted Answer

Cashflow refers to the movement of cash in and out of a business, while profit is the amount left after expenses are deducted from revenue

Answer

Cashflow is always higher than profit

Answer

Profit is more important for short-term financial health than cashflow

Answer

Profit includes non-cash items, while cashflow does not

Question 12

What is a common reason why businesses experience cashflow problems?

Accepted Answer

Late payments from customers

Answer

High market demand

Answer

Low interest rates

Answer

Reduced competition

Question 13

What is a cashflow forecast used for in business?

Accepted Answer

Predicting future cash balances

Answer

Forecasting sales revenue

Answer

Calculating current cash balances

Answer

Determining profit margins

Question 14

What can negative cashflow indicate for a business?

Accepted Answer

Financial troubles

Answer

Strong financial stability

Answer

Profitable operations

Answer

Expansion opportunities

Question 15

Why is cashflow important for a business?

Accepted Answer

To ensure it can pay its bills and expenses on time

Answer

To invest in new projects

Answer

To increase profits

Answer

To minimize taxes

Question 16

What is the formula for calculating cashflow?

Accepted Answer

Cash inflows - Cash outflows

Answer

Cash inflows + Cash outflows

Answer

Cash inflows x Cash outflows

Answer

Cash inflows / Cash outflows

Question 17

How can a business improve its cashflow?

Accepted Answer

Collecting payments from customers more promptly

Answer

Increasing expenses

Answer

Delaying payments to suppliers

Answer

Ignoring cashflow

Question 18

What does positive cashflow indicate for a business?

Accepted Answer

Healthy financial position

Answer

Bankruptcy

Answer

High debts

Answer

Low profits

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