Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
KXD is a public limited company with 60 shops selling fashion clothing to 18-25 year olds. 60% of its inventory is imported. It has not made a profit for three years. The Managing Director stated: ‘Net cash flow is still positive, but KXD has been unable to match the rise in demand. We have also had difficulty because suppliers have not delivered the inventory we need on time.’ KXD intends to appoint the vacant Operations Director post immediately by using internal recruitment or external recruitment.
(a)[2]
What is meant by the term ‘net cash flow’?
(b)[2]
Calculate the values of X and Y.
X:
Y:
(c)[4]
Identify and explain two possible problems that KXD may face if it does not make a profit.
Problem 1:
Explanation:
Problem 2:
Explanation:
(d)[6]
Identify and explain two ways in which KXD could deal with its supplier problems.
Way 1:
Explanation:
Way 2:
Explanation:
(e)[6]
Recommend whether KXD ought to use internal recruitment or external recruitment to appoint the vacant Operations Director post. 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: “Monthly difference between cash inflows and cash outflows” …