A company has recently decided to offer a discount for early payment for accounts. what is the likely result?

Decreased profits and improvement in cash flow

When do businesses come into temporary cash shortfalls?

Cash coming in < cash going out

When a business uses factoring, they improve their

Cash flow but reduce their profitability

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Business Studies Finance Mgt Strategies

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Questions 9

Answers

1
A company has recently decided to offer a discount for early payment for accounts. what is the likely result?
Increased profit and improvement in cash flow
Incrased profits and worsening of cash flow
Decreased profits and improvement in cash flow
Decreased profits and worsening of cash flow
2
When do businesses come into temporary cash shortfalls?
Cash is invested into non-current assets
Cash coming in > cash going out
Cash coming in < cash going out
Cash coming in = cash going out
3
What are the benefits of leasing as opposed to purchasing an asset?
All of the above
Tax deductions
No need to consider depreciation
Frees up cash to be used elsewhere
4
When a business uses factoring, they improve their
Working capital but increase their liabilities
Cash flow by increasing revenue
Cash flow but reduce their profitability
Working cpaital by reducing their costs
5
What is the current ratio benchmark for most businesses?
1:1
0.75-1:1
2:1
1:2
6
The payment of money for the use of equipment that is owned by aother party is known as...
Sale and lease back
Leasing
Control of current assets
Hedging
7
Matching cash flow in with cash flow out is essential to successful financial management
True
False
8
Why are cash flwo statements essential to cash flow management?
They outline the movement of cash receipts and payments
They allow managers to see where corrective action is needed
All of above
Comparing past cash flow statements allows managers to identify trends
9
Why would a business factor its accounts receivables?
Improve value of the business
Increase value of current assets
Increase owner's equity
Improve cash flow

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