Question detail
PeakPods serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?5,949, sales of 784 units, and a 40% change in costs or demand. Which option best applies Evaluate possible solutions to cash flow problems, including rescheduling payments, using overdrafts, reducing cash outflow, increasing cash inflow and finding new sources of finance?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Cash flow
Question
- A. Use cash inflow, overdraft, rescheduling payments, cash outflow to judge break-even output, suppliers impact, and the business objective in Solving cash flow problems.
- B. Give only a definition of Cash flow without using the case evidence.
- C. Treat fixed and variable costs as identical and ignore the effect on suppliers.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use cash inflow, overdraft, rescheduling payments, cash outflow to judge break-even output, suppliers impact, and the business objective in Solving cash flow problems.
Explanation
This is the best-supported choice because Use cash inflow, overdraft, rescheduling payments, cash outflow to judge break-even output, suppliers impact, and the business objective in Solving cash flow problems. The case evidence gives ?7,449, 784 units, and 40%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse fixed and variable costs, miss the suppliers, or ignore the business objective.
Common mistake
Solving cash flow problems common mistake 1
Giving a vague answer instead of directly addressing: Evaluate possible solutions to cash flow problems, including rescheduling payments, using overdrafts, reducing cash outflow, increasing cash inflow and finding new sources of finance..
Answer by clearly explaining how to evaluate possible solutions to cash flow problems, including rescheduling payments, using overdrafts, reducing cash outflow, increasing cash inflow and finding new sources of finance..
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