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The following report analyses the cash flow forecast situation for Strobe Leisure plc.

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Introduction

To: Finance manager From: Subject: Cash flow forecast Date: February 2001 Introduction The following report analyses the cash flow forecast situation for Strobe Leisure plc and will cover the following areas: - * An explanation of the purpose of a cash flow. * An explanation of why a company such as Strobe needs a cash flow forecast. * A six-month cash flow forecast for Strobe Leisure plc. * An analysis of Strobes cash flow forecast situation at present. * Final recommendation and conclusion. Main findings section 1: An explanation of a cash flow forecast. Drawing up a cash flow forecast shows whether there is enough cash available to pay salaries and settle debts on time. ...read more.

Middle

Main findings section 3: A six month cash flow forecast for Strobe July August September October November December Opening bank balance 100,000 Cash inflows sales �42,000 �34,000 �40,000 �44,000 �48,000 �50,000 Total receipts �42,000 �34,000 �40,000 �44,000 �48,000 �50,000 Cash outflows Purchases �26,000 �24,000 �20,000 �22,000 �20,000 �19,000 Expenses Wages/salaries �5,000 �5,000 �5,000 �5,000 �5,000 �5,000 Rent/rates �1,000 �1,000 �1,000 �1,000 �1,000 �1,000 Insurance �500 �500 �500 �500 �500 �500 Light/heat �400 �400 �400 �400 �400 �400 Telephone �100 �100 �100 �100 �100 �100 Repairs �200 �200 �200 �200 �200 �200 VAT �100 HP/leasing charges �150 �150 �150 �150 �150 �150 Interest on loan �30 �30 �30 �30 �30 �30 Loan repayments �200 �200 �200 �200 �200 �200 Sundry expenses �300 �300 �300 �300 �300 �300 Total repayments �33,880 �31,880 �27,980 �29,880 �27,880 �26,980 Net ...read more.

Conclusion

The overdraft is often used as a short term solution to cash flow problems. Advantages 1 The business only pays interest on an amount overdrawn each day. 2 Cheap way of borrowing. Disadvantages 1 Must be paid back with interest. Short term loan These include starter loans which provide short-term finance for a new business. Advantages 2 It's quick to arrange Disadvantages 3 Must be paid with interest, security is usually required. Cut costs Money can be saved by cutting down on material bought. Advantages 4 Reduces storage cost of high stock levels Disadvantages 5 It must be done carefully to meet customers orders. An overdraft should be taken as it's the cheapest option, and interest only has to be paid on the amount of days taken. It's quick to get and no security is needed. ...read more.

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