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An entrepreneur estimates profit correctly but faces a cash crisis because payments arrive late. Which function was weak?

Answer and explanation

Correct answer: Cash-flow management

Cash-flow management is correct. Profit may be estimated accurately, but late customer payments can still leave the business without cash to pay wages, rent, or suppliers on time. Cash-flow management plans the timing of money coming in and going out. Profit calculation is the closest distractor, but it focuses on overall income and expenses rather than the timing of available cash. Exam tip: remember that profit and cash in hand are different concepts.

Related tags

Cash Flow ManagementWorking CapitalLate PaymentsEntrepreneurial FunctionsFinancial PlanningQualities And Functions Of An EntrepreneurEntrepreneurial Skills IArtificial Intelligence

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