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Total Possible Marks: 32
Cash Flow Management Basics
Complete the following questions in the time allowed by
your teacher
QUICK DEFINITIONS
Write a short, accurate definition for each of the following key terms. (2 marks for each
good quality definition)
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2
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2
1. Define: working capital
2. Define: cash flow problem
3. Define: liquidity
4. Define: overtrading
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QUICK LISTS
In this section, provide an outline or list points which answer the question
4
5. List four ways in which a business could reduce a net cash outflow in the
short-term
A.
B.
C.
D.
E.
F.
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6. List five potential causes of significant cash flow problems in a manufacturing
business
A.
B.
C.
D.
E.
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7. List three ways in which a business could improve the cash flows arising from sales
to credit customers
A.
B.
C.
D.
E.
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Short Answers
In this section, write a short answer (one or two sentences) for each question.
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8. Explain two benefits for a business that actively manages its cash flow:
9. Explain why a loss-making business will often also experience cash-flow problems
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10. Explain why a business that invests too much in fixed assets and stocks may
experience cash flow problems
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