1.3.3 Cash and Cash-Flow

• What does positive cash flow indicate in a business?

  More money coming in than going out
• Effective cash management can support growth and investments.

  True
• Cash received from sales is an example of operating activities
• Cash refers to the physical money that a business holds, including coins, banknotes, and funds in a bank account
• Cash is the movement of money in and out of a business over time.

  False
• Excess cash from good cash management can be reinvested into new projects.

  True
• Match the cash flow statement section with its example activity:

  Investing Activities ↔️ Buying new equipment

  Financing Activities ↔️ Issuing stock

  Operating Activities ↔️ Paying wages
• Cash inflows represent money coming into the business
• Minimizing excess inventory helps to free up cash
• Increasing prices can improve cash flow without impacting customer demand.

  False
• What does cash refer to in a business context?

  Physical money held by a business
• Cash provides immediate liquidity
• Cash is crucial for paying suppliers, employees, and bills.


  True
• Match the financial term with its description:

  Cash ↔️ Physical money held by a business

  Cash Flow ↔️ Movement of cash in and out over time
• Why is cash management crucial for businesses?

  Maintains solvency and liquidity
• Order the three main sections of a cash flow statement:

  1️⃣ Operating Activities

  2️⃣ Investing Activities

  3️⃣ Financing Activities
• Cash flow projections help businesses identify potential shortfalls or surpluses.

  True
• Solvency refers to the ability of a business to meet long-term financial obligations
• A cash flow statement reports all cash inflows and cash outflows during a specific period
• What is the purpose of a cash flow projection?

  Manage liquidity
• What is the goal of maintaining positive cash flow?

  Financial health
• Strategies for maintaining positive cash flow

  1️⃣ Accelerate receivables

  2️⃣ Delay payables

  3️⃣ Reduce inventory

  4️⃣ Seek financing

  5️⃣ Increase prices
• Income from sales, loans, and investments are examples of cash inflows
• What does a cash flow statement report?

  All cash inflows and outflows
• What is the purpose of a cash flow projection?

  Forecast cash inflows and outflows
• What does positive cash flow indicate for a business?

  More money coming in
• What can poor cash management lead to for a business?

  Financial distress
• What type of activities are included in the operating activities section of a cash flow statement?

  Day-to-day operations
• A cash flow projection estimates cash inflows and outflows over a specific time.


  True
• Accelerating receivables involves encouraging customers to pay invoices promptly.


  True
• What is the primary concern when delaying payables to suppliers?

  Supplier relationships