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Why is understanding cash flow important in a small venture?

Answer and explanation

Correct answer: Because timely payments and daily operations may be affected without it

Cash flow tracks the timing of money entering and leaving the business. A venture may show accounting profit but still lack cash to pay suppliers, wages, rent, or loan instalments when they are due. Monitoring cash flow helps plan working capital and prevents operational disruption; sales alone do not show available cash.

Related tags

Cash-FlowWorking-CapitalWorking CapitalFinancial ManagementBusiness StudiesClass 12 Mcq

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