Cash Flow Chaos
Buying now and paying later is called what?
Name of the budget where you plan major asset purchases (like equipment or buildings).
What is the Capital Budget?
What is the difference between debt, and equity financing.
What is: Debt = borrowed funds to repay; Equity = selling ownership.
Managerial vs. Financial Accounting – who uses the information?
What is: Managerial = internal managers; Financial = external stakeholders.
Your business has profit but no cash – name one reason.
What is: Receivables haven’t been collected / inventory holding cash.
“2/10, net 30” means what?
What is: 2 % discount if paid within 10 days; full amount due in 30.
One reason why forecast accuracy matters.
What is: 1)Prevents cash shortages or 2) over-spending.
What is one advantage and risk of equity financing.
What is: Equity – no repayment, but loss of control.
What is one reason a manager might review the cash-flow statement instead of the income statement?
What is: To see if there is enough cash on hand to pay bills and plan short-term financing.
A new clothing brand is expanding but cash is tied in inventory. Suggest two fixes.
What is Improve inventory turnover or use short-term loan.
Selling accounts receivable for cash.
What is: Factoring
What a cash budget helps managers plan for.
What is: Surpluses and shortages in cash flow.
Borrowing to increase returns is called what?
What is Leverage.
Which three steps make up a firm’s financial planning process?
What is: (1) Forecast financial needs, (2) develop budgets, (3) establish financial controls.
A café wants to add a patio – which funding option fits?
What is: long-term loan or equity investment.
DAILY DOUBLE: You have $5 000 cash and owe $3 000 next month. What is your working capital?
What is $2000
Name one method of financial control.
What is: Monthly budget reviews or variance analysis.
Bonds held by collateral are called what?
Secured Bonds
DAILY DOUBLE: Describe the three steps in financial planning.
What is Forecast needs, create budgets, establish controls.
Profits are up but cash is down – what is the most likely cause?
What is: Revenue recorded before cash collected or large capital purchase reduced cash.
What concept does this statement describe: Money today is worth more than the same amount in the future.
What is: Time Value of Money
If your budget shows a major cash deficit next quarter, give two solutions.
What is: Reduce expenses or seek short-term financing.
A startup receives funding from a venture capitalist — what type of financing is this?
Equity Financing.
How could ratio analysis help decide whether to hire more staff?
What is Analyze profit margins or productivity ratios to see if it’s affordable.
If a company issues bonds to raise funds, is it using debt or equity financing?
What is Debt financing