Question detail
SwiftServe serves commuters while opening a second outlet; the case evidence includes net profit margin of ?6,540, sales of 660 units, and a 37% change in costs or demand. Which option best applies Explain how and why cash flow forecasts are constructed?
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 capacity utilisation, customers 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 revenue and profit as identical and ignore the effect on customers.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use cash flow to judge capacity utilisation, customers impact, and the business objective in Cash flow forecasting and interpretation.
Explanation
The option is correct because Use cash flow to judge capacity utilisation, customers impact, and the business objective in Cash flow forecasting and interpretation. The case evidence gives ?8,040, 660 units, and 37%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse revenue and profit, miss the customers, or ignore the business objective.
Common mistake
Cash flow forecasting and interpretation common mistake 1
Giving a vague answer instead of directly addressing: Explain how and why cash flow forecasts are constructed..
Answer by clearly explaining how to explain how and why cash flow forecasts are constructed..
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