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Why is understanding cash flow necessary for an entrepreneur?

Answer and explanation

Correct answer: To manage payments and expenses on time

Cash flow records the timing of money entering and leaving the enterprise. A business may show accounting profit but still face difficulty if cash arrives late while rent, wages, supplier bills, loan instalments, or utilities are due. Monitoring inflows and outflows helps plan working capital, avoid missed payments, and decide when spending can be made safely. It is a core part of daily financial control.

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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