Identify and explain two ways the cash flow of Durban Dragons could be improved
Knowledge [2 × 1] – award 1 mark for each way
Application/analysis [2 × 1] – award 1 mark for each relevant explanation of how it impacts on cash flow
Cash flow can be improved by any method that alters the amounts and timing of the flows into and out of the business. Methods might include
• Selling season tickets [way] would improve cash flow because cash would be received earlier
• Gaining sponsorship would improve cash flow by attracting in more cash earlier
• Delaying payment to creditors would also improve cash flow by postponing cash outflows until later
• Delaying payment of wages as this would postpone cash outflows
• Arranging an overdraft facility (or short term loan) would give access to cash immediately and would therefore allow a business to meet its short term financial obligations
• Disposal of unwanted fixed assets would turn assets into cash
Methods could be in context of a football club but this is not required
Do NOT allow answers such as cutting costs unless explained. For example, an answer that says selling a number of players would only be credited if they explained that the wage bill would be reduced and so therefore would the cash outflow