Question

Describe the uses and sources of cash. (150 words, in your own words)

Answer 1

Sources of cash:

*Cash flows in from the sales of products and services

*Interest on debt instruments and dividends received.

*A company can generate investing cash flows by selling their property, plant and equipment.

*If the finance department expects a project to be extremely profitable, it may attempt to borrow funds at a low interest rate.

*Corporate finance can generate cash by issuing stock and corporate bonds.

Uses of cash:

Cash flows out for operating activities such as inventory purchases, payroll and taxes

*purchase of fixed assets for the companies operations.

*repayments of debts and funds borrowed.

*payment of financial expenses.

*payments to creditors and other expenses.