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Why is understanding cash flow necessary for an entrepreneur?

Answer and explanation

Correct answer: To know when money is coming in and going out

Cash flow records the timing of cash receipts and payments. An enterprise may show sales or accounting profit but still lack cash to pay workers, suppliers, rent, or bills when they are due. Understanding inflows and outflows helps plan daily operations and avoid shortages; the other options contradict sound financial management.

Related tags

Cash-FlowFinancial-ManagementConceptNature And Importance Of Business FinanceConcept Nature And Importance Of Business FinanceSources Of Business FinanceBusiness StudiesClass 11 Mcq

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