1. You are required to produce a cash flow forecast for the period April 2013 to March 2014 for American Pie using the estimated cash outflows and inflows. The opening balancing foe the start of April will be zero.
2. Identify the key trends in the forecasts you have produced and the possible reasons behind these trends, are there period when cash flow is a problem for this new business? What steps could Billy take to overcome these problems?
Business may go bankrupt in the future, because the cash flow is less and less. The monthly balance in half of year is minus, which means business is losing money. Several expenses are not included in this forecast, such as tax, electronic. VAT in UK is 15% and this is the part cannot ignore, it means cut off from sales at least 225 per mouth. And in some part of expense seems overweight. Sales are ambitions particular in December, but then suddenly slump in rest of the year, which may unrealistic for a restaurant. Gas expenses and heating payment in winter also not include which is expensive depend on how many square your owned of your restaurant. Another problem is there is too much bank loan from the bank. Billy will have no ability to repay the bank loan, because at last month, the cash flow id minus. Bank repayment was ignoring as well. All of these missing made this forecast unreliable and won’t run correctly in future. The owner drawing too much money from business, depend on the cash flow was always in a low level, this would bad for business. Besides these, the rent is too much. Such as 8,000 per mouth occupied about half of the income in normal mouth (only four mouth’s income of the year exceed 30,000).And as we can see from wages, on April and last three mouth, expense are 3,000 for April and 4,000 each from January to march, because the payment of full time chef cook in UK is at least 3000 per mouth .so Billy himself must be the chef cook and there are only one extra waiter. From December till...
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