Free CTA Cash Flow Management & Liquidity Analysis Questions and Answers

Question 1

What is the primary focus of cash flow management?

Accepted Answer

Ensure liquidity to meet short-term obligations

Answer

Expand the company's product line.

Answer

Increase marketing budgets.

Answer

Hire more employees.

Question 2

Which report tracks incoming and outgoing cash?

Accepted Answer

Cash flow statement

Answer

Income statement.

Answer

Balance sheet.

Answer

Inventory turnover report.

Question 3

Which activity would typically cause a cash inflow?

Accepted Answer

Selling goods or services

Answer

Paying off a loan.

Answer

Buying equipment.

Answer

Increasing inventory.

Question 4

What does liquidity refer to?

Accepted Answer

Ability to quickly access cash

Answer

Raising long-term loans.

Answer

Maximizing gross margins.

Answer

Increasing advertising expenses.

Question 5

What is an example of a non-cash expense?

Accepted Answer

Depreciation

Answer

Loan repayment.

Answer

Payroll payment.

Answer

Rent expenses.

Question 6

Which ratio measures a firm's liquidity?

Accepted Answer

Current ratio

Answer

Debt-to-equity ratio.

Answer

Return on assets.

Answer

Inventory turnover ratio.

Question 7

What might indicate a liquidity crisis?

Accepted Answer

Consistently negative cash flow

Answer

Positive net income.

Answer

High return on investment.

Answer

Steady inventory growth.

Question 8

Which method helps improve cash flow?

Accepted Answer

Accelerating accounts receivable collections

Answer

Delaying customer invoicing.

Answer

Increasing product prices only.

Answer

Expanding fixed asset purchases.

Question 9

What is a cash budget?

Accepted Answer

Projection of future cash inflows and outflows

Answer

Income statement summary.

Answer

Inventory management plan.

Answer

Marketing expenditure plan.