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Corellian Engineering would like you to prepare a cash flow forecast for the 3 months ended 31st March 2018.
Jan-18
Feb-18
Mar-18
They have provided you with the following information:
Receipts
Sales
Cash
1) The forecast bank balance as at 1st Jan 2018 is
Credit
Disposal
2) Forecast Sales:
Dec-17
43000
Total Receipts
Jan-18
64000
Feb-18
84000
Payments
Mar-18
53000
Purchases
Cash
Apr-18
76000
Credit
Expenses
Percentage of sales received in the same month:
25%
Rent
Percentage of sales received in the next month:
75%
Wages
New Machinery
3) Forecast purchases:
Dec-17
38000
Jan-18
56900
Total Payments
Feb-18
73500
Mar-18
44000
Net Cash Flow
Apr-18
61500
Opening Balance
Closing Balance
Percentage of purchases paid in the same month:
40%
Percentage of purchases paid one month in arrears:
60%
What is the main cause of the company's overdraft?
2 marks
4) Forecast expenses:
Dec-17
5300
Jan-18
6000
Feb-18
7400
Give two ways in which the company could avoid having to use their overdraft:
2 marks
Mar-18
8200
Apr-18
6400
5)
The business will dispose of machinery ("disposal"). They will receive
in February 2018
and then
in March 2018.
List 3 reasons why producing a cash flow is good for the business:
6 marks
6)
The business will buy new machinery in January 201
8 costing
£65,000
7)
The business will pay rent one month in advance:
Dec-17
2300
Jan-18
3200
Feb-18
1800
Mar-18
3400
Apr-18
4100
Your score:
8) The business pays wages one month in arrears:
Estimated Score:
Dec-17
55000
Jan-18
60000
Feb-18
53000
Mar-18
65000
Apr-18
50000
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