When a case describes a cash problem, you are often asked to recommend what the business should do. A strong answer gives an action, links it to a fact in the case, explains how it helps, and states a limitation.
This is the last lesson of cash flow and finance. It uses the forecast table, finance sources and the chain from delayed receipts. The business case-answer planner turns the same structure into an outline.
What are the parts of a case-specific answer?
- Action: what the business should do.
- Case link: the fact that makes this action relevant, such as a figure, a customer type or a limit already in place.
- How it helps: the cause-and-effect chain from the action to the cash problem.
- Limitation: what might stop it working, or what it depends on.
- Judgement: a short conclusion that says whether the action is suitable and under what condition.
An action with no case link is generic. An action with no limitation reads as one-sided.
How do you test an action against the figures?
Where a case gives numbers, put the action into the numbers.
If the shortage is RM9,000 and the action brings RM6,000 forward, the remaining gap is RM3,000. Then compare it with what the business can already cover, such as an overdraft limit. The figures tell you whether the action is enough by itself.
Worked example
Percetakan Cahaya, a printing firm in George Town, forecasts a cash shortage of RM9,000 in April.
Most of its income comes from schools, which pay 60 days after the invoice. The firm already has an overdraft limit of RM5,000. A school order of RM20,000 is due to start in April, and the paper and ink for it must be paid for up front.
Action. Ask the schools to pay a 30% deposit when they place the order.
Case link. The firm’s costs are paid at the start of the job, while schools pay 60 days later. A deposit moves some income to the start of the job, when the paper bill is due.
Figures. 30% of RM20,000 = 0.30 × 20,000 = RM6,000. The shortage falls from RM9,000 to 9,000 − 6,000 = RM3,000, which fits within the RM5,000 overdraft that already exists.
How it helps. The deposit reduces the gap that opens before the schools pay, so the firm relies less on borrowing.
Limitation. The schools may not agree to a deposit, or may give the order to a printer that does not ask for one. If the deposit is refused, the full RM9,000 gap remains and is larger than the overdraft limit.
Judgement. A deposit is a suitable first step, because it nearly closes the gap and costs the firm nothing in interest. It should be paired with a talk with the bank about a larger overdraft in case the schools refuse.
The mistake to watch for
A common slip is to give an action that could fit any business, with no limitation.
Mistaken answer: “Percetakan Cahaya should take out a bank loan to solve its cash flow problem.”
The answer names a source but does not mention the RM9,000 gap, the school payment terms or the existing overdraft. A long-term loan also does not match a gap that lasts about two months.
The correction is to bring in one or two case facts, explain how the action reaches the problem, and add what might go wrong. Even a short answer can do this in four sentences.
Check yourself
Try these on paper, then open each answer.
1. Rewrite this generic answer so that it uses the Percetakan Cahaya case: “The business should ask customers to pay faster.”
Show answer
A model answer: “Percetakan Cahaya should ask the schools for a 30% deposit on the RM20,000 order, because it pays for paper and ink at the start while schools pay 60 days later. A RM6,000 deposit would cut the RM9,000 shortage to RM3,000. This depends on the schools accepting a deposit, which they may not if another printer does not ask for one.”
2. The firm asks for a 20% deposit instead, and gets it. Is the gap covered by the RM5,000 overdraft?
Show answer
Deposit: 0.20 × 20,000 = RM4,000. Remaining gap: 9,000 − 4,000 = RM5,000, which equals the overdraft limit. The gap is covered, but with no spare room if any cost is higher than forecast.
3. Give one limitation of using an overdraft to cover the gap.
Show answer
The overdraft has a limit of RM5,000, which is less than the RM9,000 shortage, and it carries interest for every day it is used. The bank may also review or reduce the facility.
Where this leads next
You have now finished the five skills in cash flow and finance. Test them together in the mixed practice set, and use the mistake log and retest queue from the practice set to track which type of slip returns. Later, case analysis and evaluation applies the same method across the whole course.
Many students can say what a business could do but find it harder to write the limitation. A teacher can help you practise that step in online one-to-one Business tuition.