ManagingCashFlow

Quick quiz on cash flow management

Inflow or Outflow?

Problems & solutions

Making & justifying choices

Which one of these events might lead to a cash flow problem?

A

Q1

B

C

D

Major customer becomes insolvent

Supplier offers longer payment terms

Warehouse stocks are reduced

Surplus fixed assets are sold

Short-term cash flow can be improved by...

A

Q2

B

C

D

Increasing quantity of stocks

Increasing overheads

Allowing debtors less time to pay

Repaying a bank loan

Factoring might improve the cash flow from…

A

Q3

B

C

D

Customers Banks

Suppliers Shareholders

Which of these would NOT normally improve net profit margin?

A

Q4

B

C

D

Lower overheads

Higher productivity

Lower capacity utilisation

Lower unit costs

Which of these would be a cash inflow into a business?

A

Q5

B

C

D

Dividend to shareholders

Supplier payment

Disposal of fixed asset

Hire purchase payment

Cash flow management in

the news!

Inflow or Outflow?Cash inflows Cash outflows

Inflow or Outflow?Cashflow Inflow OutflowPayments from trade debtorsSale of fixed assetsTax on profitsInterest on loans & overdraftsLoans from bankPayments to trade creditorsShare capital investedRepayment of loansCash sales

Problems & Solutions

Your TaskIdentify TWO ways in which a business could

SLOW

SpeedLimit

100

Speed-up cash inflows

Slow down cash outflows

SLOWCut costsDelay supplier paymentsLease fixed assetsReduce or stop dividendCancel investment

Think!EFFECTS

Reduce customer payment periodEncourage cash salesPricing / discountsSell excess stock or spare fixed assets

Think!EFFECTS

SpeedLimit

100

Choices Choices!

Two mini exam-style case studies:Two cash flow problems

Select one solution from the three choices offered

+ justify your choice