5.5 Cash and cash flow

• Cash is needed for immediate transactions
• Cash flow is essential for maintaining liquidity and financial stability
• What does a positive net cash flow indicate?

  More cash generated than spent
• What is the formula for calculating net cash flow?

  Total Cash Inflows - Total Cash Outflows
• Why is understanding the differences between cash inflows and outflows crucial for businesses?

  Manage liquidity and plan financially
• What insights does the cash flow statement provide to stakeholders?

  Liquidity and financial obligations
• What is the formula for calculating net cash flow?

  Total Cash Inflows - Total Cash Outflows
• Match the key components of cash flow with their definitions:

  Cash Inflows ↔️ Money coming into the business

  Cash Outflows ↔️ Money leaving the business
• The cash flow statement helps businesses understand their ability to meet financial obligations.

  True
• Without adequate cash, a business may face liquidity issues.


  True
• Match the feature with its relevance to cash or profit:

  Cash ↔️ Immediate transactions

  Profit ↔️ Reflects overall success
• Net cash flow is calculated as total cash inflows minus total cash outflows.


  True
• Match the cash flow type with its example:

  Cash Inflow ↔️ Customer payments

  Cash Outflow ↔️ Paying rent
• Cash inflows increase the business's net cash flow.


  True
• Cash flows from operating activities are related to the core business operations
• Why is cash flow essential for a business?

  Liquidity, stability, obligations
• A positive net cash flow indicates the business generated more cash than it spent
• A negative net cash flow indicates the business spent more cash than it generated
• Cash flow forecasting helps identify potential cash shortfalls
• Order the following methods for managing cash flow:

  1️⃣ Speeding Up Customer Payments

  2️⃣ Reducing Inventory

  3️⃣ Cash Flow Forecasting

  4️⃣ Delaying Supplier Payments
• A positive net cash flow allows a business to invest in growth opportunities.

  True
• What does cash in a business refer to?

  Physical currency and bank balances
• What is the definition of profit in a business?

  Financial gain after expenses
• Order the typical examples of cash inflows:

  1️⃣ Sales revenue

  2️⃣ Loans from banks

  3️⃣ Investments from shareholders

  4️⃣ Sale of assets
• Cash inflows are defined as money entering the business
• A positive net cash flow indicates that the business generated more cash than it spent
• Order the three main components of a cash flow statement:

  1️⃣ Operating Activities

  2️⃣ Investing Activities

  3️⃣ Financing Activities
• Cash is essential for paying suppliers and covering employee wages.


  True
• A negative net cash flow indicates that more cash was spent than generated.


  True
• Cash inflows decrease net cash flow.

  False
• What are the three main components of a cash flow statement?

  Operating, Investing, Financing
• What is factoring in cash flow management?

  Selling invoices for cash
• A negative net cash flow suggests the business may struggle to meet its financial obligations