The 3.7 Cash flow question bank gives IB Business Management students Standard Level (SL) and Higher Level (HL) authentic exam-style practice that mirrors IB Paper 1, 2, 3 structure and difficulty. Covering key syllabus areas such as systems and structures, human behavior and interaction, and sustainability and ethics, this resource builds confidence by training students in the same style of questions set by IB examiners. With instant solutions, detailed explanations, and syllabus-aligned practice, RevisionDojo helps students sharpen problem-solving skills and prepare effectively for mocks and final assessments. More than just practice, this question bank teaches students how to think the way IB examiners expect.
LuminaCare
“Our burn rate is steady, but we’ve reached our credit limit with suppliers. We operate on 90-day payment terms with clinics, so cash flow is always tight. Series A equity gives us the scale to meet demand and build a second facility—but would dilute founder control and introduce board-level oversight. The concessional loan is low-interest and non-dilutive but comes with covenants: quarterly EBITDA targets, strict capex limits, and donor-style reporting. Any miss could trigger loan restructuring or early repayment.”
| Metric | Value |
|---|---|
| Staff turnover (last 6 months) | 22% |
| Time to fill technical roles | 49 days (↑ 24%) |
| % of roles with formal job descriptions | 58% |
| Managerial span of control | Avg. 12 direct reports |
| Avg. team engagement score | 67/100 (↓ from 78) |
| The head of HR notes that burnout and unclear career paths are leading to attrition, especially among product engineers and field deployment staff. |
“Clinics love our mission—but most have no idea who we are until we show up at trade shows. We need to invest in inbound marketing, including a multilingual website, CRM tools, and a referral rewards program for midwives. More crucially, we’re perceived as a donor-funded nonprofit, not a serious tech company. To attract hospital procurement officers and larger buyers, we must reposition the brand to emphasize product quality, not just affordability and ethics.”
“We rely on LuminaCare’s devices, but their response time for repairs has worsened.” “Sometimes we get different pricing from different reps. There’s no standard process.” “I love the mission—but our procurement officer wants a brand that feels serious. A logo change isn’t enough.”
With reference to Resource 3, describe one HR issue that may be impacting LuminaCare’s ability to scale sustainably.
Explain one financial challenge and one marketing challenge LuminaCare may face if it accepts the concessional loan.
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for LuminaCare over the next five years.
FreshSteps Foundation
FreshSteps Foundation is a non-profit social enterprise based in Kenya that installs small-scale water filtration systems in rural communities. It operates as a private limited company (Ltd) but reinvests all surplus profits to expand its social impact rather than paying dividends.
Its business objectives include achieving financial sustainability and maintaining a minimum return on capital employed (ROCE) of 5% to fund future installations without relying heavily on grants.
Table 1: Statement of Profit or Loss for FreshSteps Foundation for the year ending 31 December 2024 (figures in $000)
| Item | Amount ($000) |
|---|---|
| Sales revenue | 2,600 |
| Cost of sales | 1,300 |
| Operating expenses | 1,050 |
| Depreciation expense | 100 |
| Interest expense | 40 |
| Tax | — (tax-exempt) |
Table 2: Additional Financial Information
| Item | Amount ($000) |
|---|---|
| Capital employed | 3,500 |
| Current assets | 480 |
| Current liabilities | 400 |
| Initial investment for new project | 800 |
| Net annual cash inflow from project | 220 |
Calculate the gross profit for FreshSteps Foundation. Show all your working.
State why FreshSteps Foundation is tax exempt.
Calculate the current ratio for FreshSteps Foundation. Show all your working.
Calculate the payback period for the new project. Show all your working.
Explain one financial challenge that FreshSteps Foundation may face by relying on project-based cash inflows.
EcoPod Ltd.
EcoPod Ltd. is a private limited company that designs and installs compact eco-friendly garden offices. The company was started by two friends who wanted to promote sustainable working spaces as an alternative to traditional home offices. One of their main business objectives is to expand production while maintaining their commitment to sustainability.
To finance its growth, EcoPod Ltd. reinvested retained profit and also secured a bank loan. However, the company has recently experienced cash flow difficulties due to late payments from customers and rising material costs.
Table 1 shows EcoPod Ltd.’s financial data for the previous month.
Table 1: Financial data for EcoPod Ltd. (Previous month)
| Item | Amount ($) |
|---|---|
| Revenue | 120,000 |
| Cost of goods sold | 70,000 |
| Operating expenses | 30,000 |
| Cash inflows | 45,000 |
| Cash outflows | 60,000 |
| Opening cash balance | 5,000 |
State two sources of finance used by EcoPod Ltd.
Calculate the net profit for the month. Show all your working.
Calculate the closing cash balance. Show all your working.
Identify one internal stakeholder and explain how they may be affected by EcoPod Ltd.’s cash flow problems.
Outline one advantage of operating as a private limited company.
PulseFuel Ltd.
PulseFuel Ltd. is a startup producing high-performance energy drinks aimed at endurance athletes. The company prides itself on its proprietary electrolyte formula, which forms the basis of its USP. Although sales have grown rapidly, production costs remain high and most sales are made on credit. PulseFuel Ltd. is considering adjusting its pricing strategy to gain market share in the short term.
Table 1: Cash flow forecast for PulseFuel Ltd. for the first three months of 2025
(All figures in $000)
| January | February | March | |
|---|---|---|---|
| Opening balance | 3 | 1 | (2) |
| Cash inflows | |||
| Credit sales collected | 150 | 200 | 250 |
| Crowdfunding contributions | 25 | – | – |
| Investor seed funding | – | – | 100 |
| Total cash inflows | 175 | 200 | 350 |
| Cash outflows | |||
| Packaging and ingredients | 120 | 120 | 130 |
| Wages | 30 | 30 | 30 |
| Equipment leasing | 10 | 10 | 10 |
| Distribution and marketing | 17 | 43 | 50 |
| Total cash outflows | 177 | 203 | 220 |
| Net cash flow | (2) | (3) | 130 |
| Closing balance | 1 | (2) | 128 |
Answer all the questions.
Using Table 1, calculate the total net cash flow for the quarter
Explain one reason why PulseFuel Ltd. might be profitable but still experience negative cash flow in its first two months.
Suggest one external source of finance, other than crowdfunding or seed investment, that would help PulseFuel Ltd. smooth early cash flow problems.
Identify the pricing strategy PulseFuel Ltd. may be considering and how this could affect its short-term and long-term positioning.
Explain how PulseFuel Ltd.’s USP could help support a move toward premium or contribution-based pricing in future.
CycleSpark Ltd.
CycleSpark Ltd. is a company that designs and sells electric bicycles. The business recently launched a new model and created a marketing plan focused on urban commuters. The plan includes promotional discounts, partnerships with eco-friendly organisations, and a pricing strategy to remain competitive.
To support the launch, CycleSpark obtained a medium-term loan and used retained profit from the previous year. Although sales increased, the company experienced cash flow difficulties due to a delay in customer payments.
Table 1 shows selected financial data from the month following the product launch.
Table 1: Financial data for CycleSpark Ltd. (Month 1)
| Item | Amount ($) |
|---|---|
| Revenue | 180,000 |
| Cost of goods sold | 110,000 |
| Expenses | 50,000 |
| Opening balance | 8,000 |
| Cash inflows | 70,000 |
| Cash outflows | 95,000 |
State two sources of finance used by CycleSpark Ltd.
Calculate the net profit for the month. Show all your working.
Calculate the closing cash balance for the month. Show all your working.
Explain one reason why a business with strong sales might still face cash flow problems.
Identify one element of the marketing plan mentioned in the case and explain its purpose.
CleanCurrent Ltd.
CleanCurrent Ltd. is a renewable energy start-up that installs solar panels for residential and small business clients. Initially formed as a sole trader, the business recently transitioned into a private limited company (Ltd) to scale operations and attract investment. Its primary business objectives are to increase market share in suburban regions, reduce customer acquisition costs, and achieve positive monthly cash flow by the end of the fiscal year.
The business recently launched a referral programme and expanded into two new districts. While customer inquiries have increased, installation capacity has been strained, leading to delays in payments and project backlogs. This has created tension with certain stakeholders, including installers and suppliers, who are now facing late payments.
The finance manager has prepared a simple cash flow forecast for August 2024 to assess the immediate impact of CleanCurrent’s growth and financial decisions.
Table 1: Cash Flow Forecast – August 2024
| Item | Amount (£) |
|---|---|
| Opening balance | 10,000 |
| Cash inflows | 82,000 |
| Cash outflows | 96,000 |
| Closing balance | — |
Explain one reason why CleanCurrent Ltd. may have changed from a sole trader to a private limited company.
Calculate the net cash flow and closing balance for August 2024. Show all your working.
Suggest one conflict that might arise between two stakeholder groups as a result of CleanCurrent’s recent expansion.
Analyse how cash flow challenges could affect CleanCurrent’s ability to meet its business objectives.
Suggest one short-term strategy CleanCurrent Ltd. could implement to manage cash flow more effectively.
NatureNest Ltd.
NatureNest Ltd. is a small private limited company that produces eco-friendly packaging materials. The business was founded with the aim of reducing plastic waste and supporting environmental sustainability. It currently employs 20 staff and uses a tall organizational structure, with clear lines of authority and control.
NatureNest’s CEO follows an autocratic leadership style and prefers to make most decisions without consulting the team. The company has been experiencing cash flow problems due to late payments from customers and an increase in raw material costs.
Table 1 shows selected cash flow data for NatureNest for the month of March.
Table 1: Cash flow data for March ($)
| Item | Amount ($) |
|---|---|
| Cash inflows | 25,000 |
| Cash outflows | 30,000 |
| Opening balance | 10,000 |
| Closing balance | ? |
State two features of a private limited company (Ltd).
Identify NatureNest’s business objective based on the case.
Calculate the closing balance for the month of March. Show all your working.
State one feature of a tall organizational structure and one characteristic of an autocratic leadership style.
Explain one reason why cash flow problems can be an issue for NatureNest.
Elevate Health Tech (EHT)
With reference to the stimulus, describe one internal issue that might arise from EHT’s current ownership structure.
Explain one human resource challenge and one financial challenge that EHT may face if it accepts the DIB loan and scales up
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for EHT over the next five years.
Orbis Vision Ltd.
Orbis Vision Ltd. designs and produces eco-friendly sunglasses. The company launched two major product lines in 2025 — "ReVision" (premium) and "LiteVision" (budget). Management is finalizing year-end accounts and evaluating future marketing strategies.
The finance team reported strong accounting profits but warned that cash reserves were lower than expected. A promotional campaign combining online influencers with television advertising contributed to a rapid but uneven surge in sales.
Below is an extract from Orbis Vision Ltd.'s draft financial statements for 2025:
| Statement of Profit and Loss 2025 (in $'000) |
|---|
| Revenue |
| Cost of goods sold (COGS) |
| Gross profit |
| Expenses |
| Net profit before tax |
| Statement of Financial Position 2025 (in $'000) |
|---|
| Non-current tangible assets |
| Accumulated depreciation |
| Net non-current tangible assets |
| Current assets |
| Current liabilities |
| Non-current liabilities |
| Net assets |
Additional information:
Calculate the missing figures for: (i) Gross profit (ii) Net profit before tax
Calculate the missing figures for: (i) Accumulated depreciation (straight-line method) (ii) Net non-current tangible assets
Calculate the depreciation charge for Year 1 using the units of production method.
Explain one reason why a profitable company like Orbis Vision Ltd. might face liquidity issues.
Identify two types of promotional strategies Orbis Vision Ltd. used based on the case information.
EcoClean
EcoClean is a business that provides eco-friendly cleaning services to homes and small offices. The company is led by a democratic manager who encourages staff to contribute ideas and gives them responsibility for small decision-making tasks.
The manager recently noticed that employees were confused about new pricing plans, which were shared only through a group message. As part of a new marketing plan, EcoClean is targeting environmentally conscious customers through partnerships with green living websites.
To assess its financial health, EcoClean reviewed its liquidity and profitability performance. It also faced a minor cash flow issue in January due to delayed customer payments.
Table 1 shows selected financial data for EcoClean in January 2025.
Table 1: Selected financial data for January 2025
| Item | Amount ($) |
|---|---|
| Current assets | 24,000 |
| Current liabilities | 12,000 |
| Net profit | 6,000 |
| Revenue | 30,000 |
| Opening balance | 2,000 |
| Cash inflows | 10,000 |
| Cash outflows | 12,500 |
Calculate the net profit margin for EcoClean. Show all your working.
Calculate the closing cash balance for January 2025. Show all your working.
State one advantage and one disadvantage of using group messages as a method of communication.
Explain one benefit of targeting a specific market segment in EcoClean’s marketing planning.