5.5 Cash and cash flow

• What does the term "cash" refer to in business finance?

  Money available to spend
• Match the cash inflow source with its description:

  Sales ↔️ Revenue from selling goods or services

  Investments ↔️ Money received from investments

  Loans ↔️ Cash from borrowing money
• Understanding the uses of cash is crucial for managing cash flow effectively.

  True
• Optimizing inventory levels is a key strategy for improving cash flow by freeing up cash tied up in excess stock
• What is cash flow management defined as?

  Monitoring cash movement
• What are key strategies for managing cash flow?

  1️⃣ Invoicing and collections

  2️⃣ Inventory management

  3️⃣ Expense control

  4️⃣ Forecasting

  5️⃣ Financing options
• What is one benefit of sufficient cash flow for a business?

  Meet financial obligations
• Effective cash flow management includes understanding the sources and uses of cash
• What is one source of cash for a business?

  Sales
• What are operating expenses used for?

  Day-to-day operations
• Poor cash flow can lead to financial distress and bankruptcy.


  True
• Effective cash flow management helps businesses maintain financial stability
• Cash flow is important for long-term financial stability
• Cash flow forecasting reduces the risk of financial distress.

  True
• Analyzing changes in cash flow over time helps identify trends in a business's financial health.


  True
• Cash represents a snapshot in time, while cash flow represents a period of time.


  True
• Cash spent on long-term investments, such as purchasing equipment, is called capital expenditures
• Why is effective cash flow management important for a business?

  To meet financial obligations
• Match the cash flow management strategy with its description:

  Invoicing and collections ↔️ Sending invoices promptly and following up on late payments

  Inventory management ↔️ Optimizing inventory levels to free up cash

  Expense control ↔️ Managing and prioritizing cash outflows
• Effective cash flow management minimizes the need for external financing
• Factoring is an example of a financing option
• What can poor cash flow lead to for a business?

  Financial distress
• Sources of cash are essential for maintaining a healthy cash flow.


  True
• Capital expenditures are a use of cash for long-term investments.


  True
• Sufficient cash flow ensures a business can pay suppliers, employees, loans, and other expenses on time
• What is cash flow management?

  Monitoring and controlling cash
• Match the term with its definition:

  Cash ↔️ Money available for immediate use

  Cash Flow ↔️ Movement of cash over a period
• Steps in cash flow forecasting

  1️⃣ Gather data

  2️⃣ Identify cash inflows

  3️⃣ Determine cash outflows

  4️⃣ Prepare forecast

  5️⃣ Analyze and adjust
• What is a cash flow statement?

  Financial statement summarizing cash movement
• The movement of cash in and out of a business over time is called cash flow
• What are operating expenses in the context of cash outflows?

  Day-to-day business costs
• Arrange the following cash flow management strategies in order of their impact on business operations:

  1️⃣ Invoicing and collections

  2️⃣ Inventory management

  3️⃣ Expense control

  4️⃣ Forecasting

  5️⃣ Financing options
• By implementing cash flow management strategies, businesses can ensure they have sufficient cash for operations and growth.


  True
• Effective cash flow management ensures a business can meet its financial obligations.

  True
• Regularly forecasting cash inflows and outflows helps identify potential cash flow issues.

  True
• Positive cash flow allows businesses to invest in growth opportunities.

  True
• What does cash flow measure?

  Movement of cash
• Loans are considered a source of cash
• What are key strategies for managing cash flow?

  1️⃣ Invoicing and collections

  2️⃣ Inventory management

  3️⃣ Expense control

  4️⃣ Forecasting

  5️⃣ Financing options
• Key strategies for managing cash flow

  1️⃣ Invoicing and collections

  2️⃣ Inventory management

  3️⃣ Expense control

  4️⃣ Forecasting

  5️⃣ Financing options