Question detail
Harbour Hire serves commuters while opening a second outlet; the case evidence includes net profit margin of ?7,754, sales of 619 units, and a 23% change in costs or demand. Which option best applies Explain consequences of cash flow problems and effects of positive cash flow?
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 flow to judge unit contribution, owners impact, and the business objective in Cash flow forecasting and interpretation.
- B. Give only a definition of Cash flow without using the case evidence.
- C. Treat break-even and 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 flow to judge unit contribution, owners impact, and the business objective in Cash flow forecasting and interpretation.
Explanation
Choose this response because Use cash flow to judge unit contribution, owners impact, and the business objective in Cash flow forecasting and interpretation. The case evidence gives ?9,254, 619 units, and 23%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse break-even and profit, miss the owners, or ignore the business objective.
Common mistake
Cash flow forecasting and interpretation common mistake 1
Giving a vague answer instead of directly addressing: Explain consequences of cash flow problems and effects of positive cash flow..
Answer by clearly explaining how to explain consequences of cash flow problems and effects of positive cash flow..
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