Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
WFH manufactures hats and sells them to a mass market. It keeps inventory at a high level. The Managing Director is worried about the liquidity of the business and has been studying WFH’s financial statements. An extract is given in Table 2.1. The Managing Director believes the business could fail. Other stakeholder groups may also want to look at WFH’s financial statements.
(a)[2]
Identify two possible causes of business failure.
(b)[2]
Calculate WFH’s acid test ratio for 2022 and include your working.
(c)[4]
Identify four reasons that businesses keep inventory.
(d)[6]
Explain why the following two stakeholder groups may be interested in WFH’s financial statements: Employees and Suppliers.
(e)[6]
Do you think it is always better for a business to sell to a mass market? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Weak planning/lack of objectives” …