Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
LMA is a family-run restaurant. The business was launched 20 years ago and has stayed small. LMA operates as a partnership. The partners are weighing up whether LMA ought to convert into a private limited company. The Finance Manager is reviewing LMA’s cash-flow forecast. An extract is shown in Table 2.1.
(a)[2]
Identify two reasons why a business could experience cash-flow problems.
(b)[2]
Calculate the values of X and Y.
(c)[4]
Identify four examples of cash inflows.
(d)[6]
Explain one advantage and one disadvantage to LMA of becoming a private limited company.
(e)[6]
Explain two reasons why a business may stay small. Which reason is likely to be the most important? 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: “Holding too much inventory” …