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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!

cash; cash- flow forecast; profit; stock; prediction

## 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

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
£'s
£'s

2,750 3,850
£'s

2,200
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

(i)

(ii)

(iii)

(iv)

(v)

(vi)

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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
problems?