Understanding cash flow forecasts:

• What is a cash flow forecast?

  Projection of cash inflows/outflows
• Cash outflows in a cash flow forecast include wages and salaries
• Order the steps in reconciling cash flows to calculate net cash flow.

  1️⃣ Calculate total cash inflows

  2️⃣ Calculate total cash outflows

  3️⃣ Subtract total outflows from total inflows
• Cash flow forecasting is primarily used to avoid liquidity issues.

  True
• Loan repayments are considered a cash inflow in a cash flow forecast.

  False
• Money received from selling products or services is called sales revenue
• Money spent on buying raw materials or inventory is considered a cash outflow
• What is the opening balance in a cash flow forecast?

  Starting cash amount
• Understanding the components of a cash flow forecast is crucial for effective cash flow management.


  True
• Match the cash outflow with its description:

  Purchases of materials/stock ↔️ Money spent on raw materials

  Rent, rates, utilities ↔️ Ongoing operational expenses

  Tax payments ↔️ Money paid to the government
• Cash surplus occurs when total cash inflows exceed total cash outflows
• Why is anticipating cash surpluses and deficits important for businesses?

  Proactive cash flow management
• What is the primary goal of analyzing cash flow forecasts?

  Identify cash surpluses/deficits
• Cash flow forecasts help businesses anticipate periods of surplus or deficit.

  True
• Arrange the components of a cash flow forecast in the correct order:

  1️⃣ Opening Balance

  2️⃣ Cash Inflows

  3️⃣ Cash Outflows

  4️⃣ Net Cash Flow

  5️⃣ Closing Balance
• The closing balance is calculated by adding net cash flow to the opening balance.


  True
• What are the key cash inflows in a cash flow forecast?

  Sales revenue, loan repayments
• What type of income is generated from interest on savings or investments?

  Interest received
• Rent, rates, and utilities are ongoing operational expenses that represent cash outflows.


  True
• Net cash flow is calculated by subtracting total cash outflows from total cash inflows
• When does a cash surplus occur in a business?

  Inflows exceed outflows
• What is one strategy a business can use when it has a cash surplus?

  Invest surplus cash
• What is the purpose of negotiating extended payment terms during a cash deficit?

  Delay payment deadlines
• A cash flow forecast helps businesses identify periods of surplus or deficit.

  True
• Loan repayments are considered a cash outflow in a cash flow forecast.


  True
• What action can a business take if a cash flow forecast identifies a potential shortage?

  Seek additional financing
• The closing balance in a cash flow forecast is calculated by adding net cash flow to the opening balance.
• Asset sales are classified as cash inflows in a cash flow forecast.


  True
• What is a cash flow forecast used for?

  Plan and manage cash
• Match the benefit of cash flow forecasting with its explanation:

  Anticipating surplus/deficit ↔️ Identify periods with excess or shortage of cash

  Identifying potential shortages ↔️ Flags shortages, enabling businesses to act

  Informing financing decisions ↔️ Provides data for borrowing choices
• Wages and salaries are considered cash outflows
• Businesses use cash flow forecasts to anticipate surpluses or deficits and proactively manage their cash flow.


  True
• Steps a business may take when it identifies a cash deficit

  1️⃣ Take action to address the shortfall

  2️⃣ Seek additional financing
• A cash deficit may indicate the business is struggling to meet its financial obligations.

  True
• A cash flow forecast is a projection of a business's future cash inflows and outflows
• Match the cash inflow or outflow with its example:

  Cash Inflow ↔️ Sales revenue

  Cash Outflow ↔️ Wages and salaries
• Cash flow forecasting helps businesses avoid potential liquidity issues.

  True
• How is net cash flow calculated in a cash flow forecast?

  Inflows minus outflows
• Key cash outflows in a cash flow forecast include wages and salaries
• Loan repayments are considered cash inflows because they represent money coming into the business.


  True