Finance, accounts and appraisal
| English | 中文 | Pinyin |
|---|---|---|
| cash flow/kæʃ fləʊ/ | 现金流 | xiàn jīn liú |
| liquidity/lɪˈkwɪdɪti/ | 流动性 | liú dòng xìng |
A decision you can investigate
- A business reports profit but cannot pay next month's suppliers.
- A credit sale can raise recorded revenue before the cash arrives.
Build the explanation
- Profit compares revenue with expenses; cash flow 现金流 records cash entering and leaving. Liquidity 流动性 concerns meeting short-term obligations.
- Finance choices differ in repayment, control, cost and suitability for the length of the need.
Match the terms to their precise meanings.
Use these definitions in the particular context of Finance, accounts and appraisal.
Work through the evidence
- Opening cash is 2,000, cash receipts 3,000 and payments 4,200. Net cash flow = 3,000 − 4,200 = −1,200.
- Closing cash = 2,000 − 1,200 = 800. A forecast must also show when each payment occurs.
What is closing cash in this example?
Opening cash is 2,000, cash receipts 3,000 and payments 4,200. Net cash flow = 3,000 − 4,200 = −1,200. Closing cash = 2,000 − 1,200 = 800. A forecast must also show when each payment occurs.
Which caution belongs to this particular task?
A profitable investment may have a long payback and a cash shortage before benefits arrive. HL adds debt/equity ratios and budgets; do not infer these requirements from an SL cash-flow exercise.
The explanation in this lesson makes a conditional claim; relevant context and evidence still matter.
HL adds debt/equity ratios and budgets; do not infer these requirements from an SL cash-flow exercise.
Test the limits
- A profitable investment may have a long payback and a cash shortage before benefits arrive.
- HL adds debt/equity ratios and budgets; do not infer these requirements from an SL cash-flow exercise.
Choose the two statements supported by this lesson.
The concept and worked evidence support these claims; the stated limits rule out the universal shortcut.
Apply and explain your answer
- What is closing cash in this example?
- 800, despite a negative net cash flow in the period.
Use the terms precisely
- cash flow: Cash receipts and payments over a period.
- liquidity: Ability to meet short-term financial obligations.
Opening cash is 2,000, cash receipts 3,000 and payments 4,200. Net cash flow = 3,000 − 4,200 = −1,200. Closing cash = 2,000 − 1,200 = 800. A forecast must also show when each payment occurs.
A profitable investment may have a long payback and a cash shortage before benefits arrive. HL adds debt/equity ratios and budgets; do not infer these requirements from an SL cash-flow exercise.
Profit compares revenue with expenses; cash flow records cash entering and leaving. Liquidity concerns meeting short-term obligations.