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QLDBusiness StudiesQuick questions
Unit 2: Business growth
Quick questions on Cash flow and working capital management for a growing business (QCE Business Unit 2)
8short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the cash flow statement?Show answer
The cash flow statement tracks the actual movement of cash in and out over a period, grouped into three activities.
What is working capital?Show answer
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What is the cash conversion cycle?Show answer
The cash conversion cycle is the time between paying for inputs and collecting cash from the customer. The longer the cycle, the more cash is tied up.
What are strategies to manage cash flow gaps?Show answer
Saying a cash shortage means the business is unprofitable. Overtrading is precisely the case of a profitable business short of cash.
What is only offering one type of strategy?Show answer
A strong answer balances speeding up cash in, slowing cash out, and arranging a buffer.
What is q1?Show answer
Explain, with an example, why profit and cash are not the same thing. [2 marks]
What is q2?Show answer
A business has current assets of 20,000, debtors 100,000) and current liabilities of $110,000. Calculate working capital and comment on what is tying up cash. [3 marks]
What is q3?Show answer
A rapidly growing business is profitable but keeps running short of cash. Identify the likely cause and recommend three strategies to fix it. [4 marks]