Business 7115 · O Level · 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 choose and pack all the items for each order. As a result, 35 workers will become redundant. The technology will cost $40 000. The manager is weighing up whether to finance this technology from internal sources or external sources.
(a)[2]
Define what is meant by ‘opening balance’.
(b)[2]
State two methods a business can use to boost productivity.
(c)[4]
Identify four internal finance sources that a business could use.
(d)[6]
Explain two likely effects that introducing the new technology may have on NPX’s cash-flow forecast.
(e)[6]
Do you think a tertiary sector business would be better off using full-time employees instead of part-time employees? 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: “The cash a business holds at the beginning of the month or trading period” …