Question detail
GreenGlow serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?5,986, sales of 706 units, and a 39% 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 net profit margin, owners 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 gross and net profit as identical and ignore the effect on owners.
- 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 net profit margin, owners impact, and the business objective in Solving cash flow problems.
Explanation
This option works because Use cash inflow, overdraft, rescheduling payments, cash outflow to judge net profit margin, owners impact, and the business objective in Solving cash flow problems. The case evidence gives ?7,486, 706 units, and 39%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse gross and net profit, miss the owners, 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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