Question detail
PeakPods serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?6,779, sales of 644 units, and a 30% 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 break-even output, employees 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 employees.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use cash flow to judge break-even output, employees impact, and the business objective in Cash flow forecasting and interpretation.
Explanation
This answer fits the scenario because Use cash flow to judge break-even output, employees impact, and the business objective in Cash flow forecasting and interpretation. The case evidence gives ?8,279, 644 units, and 30%, 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 employees, 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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