Late payments, unforeseen costs, unexpected demand changes.

Late payments, unforeseen costs, unexpected demand changes.

• A. Bad Debts
• B. Inventory Shortages
• C. Capital Expenditure
• D. Causes of Cash Flow Problems

Answer: (D)

Cash flow is about the timing of money coming in versus going out. Late payments slow cash receipts, creating gaps between when money is owed and when it is received. Unforeseen costs increase cash outflows unexpectedly, squeezing liquidity. Unexpected demand changes can push up the need for inventory, labor, and other working capital, altering the timing of cash needs. Together, these illustrate how disruptions in inflows and outflows create cash flow problems. That broad category—causes of cash flow problems—best fits because it covers all these timing and variability risks. While the other options can affect cash flow, they are narrower or more specific situations rather than the general causes described.

Cash flow is about the timing of money coming in versus going out. Late payments slow cash receipts, creating gaps between when money is owed and when it is received. Unforeseen costs increase cash outflows unexpectedly, squeezing liquidity. Unexpected demand changes can push up the need for inventory, labor, and other working capital, altering the timing of cash needs. Together, these illustrate how disruptions in inflows and outflows create cash flow problems. That broad category—causes of cash flow problems—best fits because it covers all these timing and variability risks. While the other options can affect cash flow, they are narrower or more specific situations rather than the general causes described.