DECA Financial Consulting Practice Exam 2025 - Free DECA Financial Consulting Practice Questions and Study Guide

Question: 1 / 400

What is a common consequence of poor financial planning in a business?

Increased revenue

Operational efficiency

Cash flow problems

Poor financial planning often leads to cash flow problems, which is a prevalent consequence in businesses. When a company does not adequately forecast its revenue and expenses, it might find itself unable to cover its short-term liabilities. This can result in an inability to pay suppliers on time, causing strained relationships and potentially leading to higher operating costs as well as loss of creditworthiness.

Inadequate financial planning can also mean that a business fails to set aside enough funds for unexpected expenses or downturns in income, further exacerbating cash flow issues. This can hinder the business's ability to invest in opportunities for growth, respond to market changes, or manage day-to-day operations effectively. Over time, ongoing cash flow problems can jeopardize the overall financial health of the organization.

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