Recommendations
Cash flow forecasts is important in every business as they display figures throughout the
year which allows organisations to see how they have spent their money and their overall
profit.
The strengths of the cash flow forecast that I am looking at is that there is a steady
payback of loan repayments. This shows that the business is able to repay regular
payments which shows they are trustworthy and organisations will more likely want to get
involved with them in the future.
From June to December there was a positive closing balance which shows that they were
no longer in need of owing anyone money and this means that their organisation is
becoming successful and profitable.
Another strength of this cash flow forecast would be that there is a steady increase in
sales. This shows that the company is getting popular and shows people are interested in
what they are selling. This shows when from April to August, they went from £15,000 to
£75,937.50 in sales.
A weakness of this cash flow forecast would be that the start-up costs were high. This
means that the organisation would need to pay this back and it can mean that they are
not able to gain a profit during the first few months of having their business. During
January, there is no sales at all which is obviously a massive drawback as it shows that
no customers were interested in the company. This also means that they were not able to
gain a profit which could affect them at a later stage.
Another weakness for this cash flow forecast would be that they took out a large loan.
This is not good for any company as it means that they have to pay it back regularly and
this would be taken out of their profit that they have gained.
My recommendations would be to have the £75k loan paid in January instead of
February so that there is not a closing balance of a minus number. A second
recommendation could be that instead of purchasing the machinery, they could just rent
it instead which would allow more of a profit to be achieved for them.
Cash flow forecasts is important in every business as they display figures throughout the
year which allows organisations to see how they have spent their money and their overall
profit.
The strengths of the cash flow forecast that I am looking at is that there is a steady
payback of loan repayments. This shows that the business is able to repay regular
payments which shows they are trustworthy and organisations will more likely want to get
involved with them in the future.
From June to December there was a positive closing balance which shows that they were
no longer in need of owing anyone money and this means that their organisation is
becoming successful and profitable.
Another strength of this cash flow forecast would be that there is a steady increase in
sales. This shows that the company is getting popular and shows people are interested in
what they are selling. This shows when from April to August, they went from £15,000 to
£75,937.50 in sales.
A weakness of this cash flow forecast would be that the start-up costs were high. This
means that the organisation would need to pay this back and it can mean that they are
not able to gain a profit during the first few months of having their business. During
January, there is no sales at all which is obviously a massive drawback as it shows that
no customers were interested in the company. This also means that they were not able to
gain a profit which could affect them at a later stage.
Another weakness for this cash flow forecast would be that they took out a large loan.
This is not good for any company as it means that they have to pay it back regularly and
this would be taken out of their profit that they have gained.
My recommendations would be to have the £75k loan paid in January instead of
February so that there is not a closing balance of a minus number. A second
recommendation could be that instead of purchasing the machinery, they could just rent
it instead which would allow more of a profit to be achieved for them.
