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Why is it important to consider cash flow while making a financial plan?

Answer and explanation

Correct answer: It helps understand the timing of income and payments

Cash flow records the timing of cash coming into and going out of the business. A business may show accounting profit and still face difficulty paying wages, suppliers, rent, or loan instalments if cash arrives later than payments are due. Cash-flow planning therefore supports liquidity and timely payment management. It does not remove expenses or measure product quality.

Related tags

Cash FlowFinancial PlanningBusiness FinanceConceptNature And Importance Of Business FinanceConcept Nature And Importance Of Business FinanceSources Of Business FinanceBusiness StudiesClass 11 Mcq

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