Practice question

Why is cash flow management critical for a seasonal coach tour operator?

  1. Because profit and cash are always identical figures
  2. Because revenue is concentrated in peak months while many costs are incurred year-round, risking liquidity shortfalls
  3. Because tax is only payable in cash
  4. Because depreciation is a cash outflow each month

Answer: B — Because revenue is concentrated in peak months while many costs are incurred year-round, risking liquidity shortfalls

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