Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
OTK is a small jewellery shop located in the middle of Main City. At present, the business does not use ecommerce. OTK purchases its jewellery from local suppliers. Payment for the jewellery is made 30 days later. The shop manager is studying OTK’s cash flow forecast. She worries that the business could face a short-term cash flow issue.
(a)[2]
Define ‘cash flow forecast’.
(b)[2]
Identify two reasons why cash is important for a business.
(c)[4]
Identify four functions of management.
(d)[6]
Explain two ways OTK could overcome a short-term cash flow problem.
(e)[6]
Explain two threats to a business of using ecommerce. Which threat 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: “Forecast of a business’s future cash inflows and outflows (usually month by month)” …