1. Explain what is meant by business cash flow. 2. List three sources of short-term finance for a business. 3. List three sources of medium-term finance for a business. 4. List three sources of long-term finance for a business. 5. What is equity finance? 6. Explain the term ‘retained earnings’. 7. Explain the difference between an overdraft and trade credit. 8. Explain what is meant by sale and leaseback.
Critical Thinking Skills 1. Complete the following cash flow budget:
Kintyre Limited Cash Flow Forecast Jan
RECEIPTS
Sales income Grants
(A) TOTAL RECEIPTS PAYMENTS
Purchases of stock Wages
Marketing and advertising Insurance
(B) TOTAL PAYMENTS (C) Net cash (A - B) (D) Opening cash Closing cash (C + D)
3,000 1,000 2,000
500 1,000 3,000 200 0
2,000 3,000 1,000 0
3,000 3,000 1,000 2,000
e e
12,000 8,000 1,000
0
Feb March April e
e
5,000 14,000 0
0 Total
Jan-April e
5,000
2. Give three reasons why cash flow forecasts are important to a business.
3. Identify two responses a business can adopt if it experiences cash flow problems.
4. Identify three things that a business should consider before selecting a source of finance.
5. List five things a bank will want to know before agreeing to provide a loan to a business.
