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CIPS Exam L4M2 Topic 2 Question 50 Discussion
Topic #: 2
Which of the following always impact negatively on a company's cash flow? Select TWO that ap-ply
To answer this question, candidates are required to remember the cash flow cycle and cost entries as well as the impact of their timing on a business.
Source: https://cfoperspective.com/free-your-cash-trapped-in-the-cash-conversion-cycle/
Shorter payment term and more inventory are likely to have negative impact on the cash flow be-cause the buyer has to pay sooner and greater.
'Customers agree to pay immediately' will increase the organisation's bank account sooner.
Depreciation has no impact on cash flow as it is only listed in Profit and Loss statement.
Increasing revenue may have negative or positive impact on cash flow, depending on the real situation.
LO 1, AC 1.4
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