Cash Budget, Corporate Finance

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Analyse the budget shown below, and discuss any issues raised regarding cash flow and legal requirements. Suggest at least three alternative courses of action the organisation could take to help overcome the issues identified. For the purpose of this exercise, please assume that the organisation has an agreed overdraft of £750,000 with its bankers.

Task 4 exercise:

Jan
Feb March April May June
Receipts: £000 £000 £000 £000 £000 £000

Sales Receipts
2110 2156 2164 2219 2284 2444

Proceeds from loan
4000

Total Receipts
6110 2156 2164 2219 2284 2444

Payments: £000 £000 £000 £000 £000 £000

Material Purchases
718 733 757 777 822 880

Wages
600 600 550 550 550 450

Fixed Costs
700 700 710 710 715 715

Lease of new building
200 200 200 200 200

Advertising fees
120 120 120 130

Corporation tax
650

Capital expenditure
2750

Loan repayment
450 450 450

Total payments
2018 2353 5087 2807 2867 3345


Net cash flow
4092 (197) (2923) (588) (583) (901)

Opening bank balance
185 4277 4080 1157 569 (14)

Closing Bank Balance
4277 4080 1157 569 (14) (915)

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