Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
NPX is an online retail business. Every order is dispatched straight to customers from its warehouse. NPX employs 60 full-time workers. The Operations Manager is studying NPX’s cash-flow forecast. An extract appears in Table 2.1. To raise productivity, the manager intends to bring in new technology that can pick and pack all the items for each order. This would make 35 workers redundant. The technology will cost $40 000. The manager is deciding whether to use internal sources or external sources to finance this technology.
(a)[2]
Define the term ‘opening balance’.
(b)[2]
State two methods a business can use to increase productivity.
(c)[4]
Identify four sources of internal finance that a business might use.
(d)[6]
Explain two possible ways in which NPX’s cash-flow forecast could be affected by the introduction of the new technology.
(e)[6]
Do you think it is better for a tertiary sector business to employ full-time staff rather than part-time staff? 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: “Cash balance held by a business at the beginning of the month/trading period” …