Word bank: businesses · long-term · operating · Profit

1. ≠ cash.
2. Cash flow: , investing, financing.
3. Free cash flow = operating cash flow − spending on assets.
4. Many fail from running out of cash, not from losses.

1. A company reports a profit this year, but its bank balance keeps falling.

   1. Which is a likely explanation?

   • A. Customers are slow to pay, so sales are recorded before cash arrives.
   • B. Profit always equals cash, so the bank made a mistake.
   • C. The company has no expenses.
   • D. Revenue fell to zero.

2. 2. Buying a new delivery van would appear in which section of the cash flow statement?

   • A. Operating
   • B. Financing
   • C. Investing
   • D. It doesn't appear

3. 3. A fast-growing business is always safe from cash problems because its sales are rising.

   True/False

1. 1. Operating cash flow is $80,000, and the company spent $30,000 on new equipment. What's its free cash flow?

2. 2. Classify each as operating, investing, or financing cash flow: buying a delivery truck, paying employees, taking out a bank loan.

1. 1. Have you ever had to pay for something before you got paid back? How did you handle it?

2. 2. What could a small business do to avoid running out of cash while growing?