Cash Flow

Select an option above to see an explanation here.

A) Income is a component of cash flow analysis, as it represents money coming into a client's financial situation. B) Expenses are a component of cash flow analysis, as they represent money going out of a client's financial situation. C) Net worth is not a component of cash flow analysis, as it represents the difference between a client's assets and liabilities. D) Savings are a component of cash flow analysis, as they represent money set aside by a client for future use or emergencies.

Select an option above to see an explanation here.

A) Analyzing cash flow does not directly determine a client's net worth. B) Assessing a client's risk tolerance is not the primary purpose of cash flow analysis, although it may be a factor in creating an investment strategy. C) The primary purpose of analyzing a client's cash flow is to create an appropriate investment strategy based on their financial situation. D) Calculating a client's tax liability is not the primary purpose of cash flow analysis, although it may be a factor in creating an investment strategy.

Select an option above to see an explanation here.

A) The client has a monthly cash flow surplus of $500, as their income ($5,000) exceeds their expenses ($4,500). B) The client has no cash flow deficit, as their income exceeds expenses. C) The client's cash flow surplus is not $9,500, as this would be the sum of their income and expenses. D) The client does not have a cash flow deficit of $9,500, as their income exceeds their expenses.