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Specification Topic: Cash-flow

Q1 Fill in the gaps

In order to survive a business needs ____________, for example it will need to buy ____________ and
pay employees. To determine when cash will be coming in and going out of the business, a _________
- ___________ ____________________ can be produced. This is a _________________ of the
________________, or cash inflows, and _____________, or cash outflows, expected over time. The
timing of cash coming in and going out of a business is vital in order to see if there is enough cash, or a
____________, with which to run the business. If cash outflows are greater than inflows, the business
is said to have a ________________ and will need to take action to ensure it has enough cash to
_____________. An important point to note is that cash is different to __________. Cash is recorded
when it is ______________ or spent, whereas profit is recorded straight __________ the sale is made.
A business can be _______________________, but still run out of cash and therefore runs the risk of
becoming insolvent. For example, a business can make a profit on a sale, but if the customer pays on
_______________ credit one month later, the business is left without that cash supply to use now!

Choose from: profitable; received; survive; receipts; after; surplus; trade; payments; deficit;
cash; cash- flow forecast; profit; stock; prediction

Q2 Match it! Match the key term to the definition or formula

2.1 Cash inflows a. opening balance + net cash flow

2.2 Cash outflows b. closing balance of the previous period

2.3 Net cash flow c. payments made by the business

2.4 Opening balance d. receipts of the business

2.5 Closing balance e. cash inflows - cash outflows in a given period

Q3 Calculation time – number 1! Calculate the net cash flow for Business A, B & C using the
information contained in the bar charts

Business A Business B Business C

Predicted cash inflows and outflows Precicted cash inflows and outflows Predicted cash inflows and
April May outflows June

6,050 7,700 5,500

5,500 7,150 4,950
4,950 6,600 4,400
4,400 6,050 3,850
3,850 5,500
4,950 3,300
3,300 4,400 2,750

2,750 3,850

2,200 3,300 1,650
1,650 2,750 1,100
1,100 2,200
1,650 550
550 1,100 0
0 550
Cash inflows Cash 0 Cash inflows Cash
outflows Cash inflows Cash outflows outflows

3.1 Net cash flow = 3.2 Net cash flow = 3.3 Net cash flow =

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Specification Topic: Cash-flow

Q4 Calculation time – number 2! Calculate the missing figures using the following information
relating to Rose & White Ltd

Extract from the cash-flow forecast for Rose & White Ltd

June (£) July (£)

Receipts 3,750 2,300

Variable costs 2,450 3,700

Fixed costs 500 800

Total payments (i) 4,500

Net cash flow (ii) (iv)

Opening balance 1,325 (v)

Closing balance (iii) (vi)

4.1 Total payments for June


4.2 Net cash flow for June


4.3 Closing balance for June


4.4 Net cash flow for July


4.5 Opening balance for July


4.6 Closing balance for July


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Specification Topic: Cash-flow

Q5 Odd one out! Which of the following is NOT a possible solution to a firm’s cash flow

5.1 Finding new sources of finance

5.2 Re-scheduling payments

5.3 Reducing cash outflow

5.4 Reducing cash inflow

5.5 Arranging an overdraft

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