Target 8 (Financial Management)

Businessman Alexander Belyaev He begins the operations of his company on January 1st. As an authorized capital he made to the account of 20 000 CU During the first six months of trading, he expects the following results (Table. 5).


Table 5

Performance of an enterprise

The CU

Month January February March April May June

Sales 10 000 10 000 15 000 20 000 20 000 24 000

Purchases of goods 8 000 7 500 10 000 10 000 12 000 14 000


20% of sales is planned to produce with immediate payment, and the remaining 80% - to the provision of a two-month commercial loan customers. Suppliers offer credit for a period of one month for all purchases. Belyaev intends to hire two assistants with wages 600 CU per month each.

Payment of costs for rental of premises (5,000 MU per year) will be made on a quarterly basis, for the quarter ahead.

Other costs associated with operating and 4000 CU per month, it is scheduled to pay on a monthly basis for the past month.

In January it will be paid for the purchase of a car worth 10,000 CU and low-grade accessories worth 8000 CU

On his personal needs businesswoman suggests to withdraw from circulation 600 CU monthly. It is expected that the supply of goods at the end of the period (June 30) will be evaluated in 2400 CU at cost. Depreciation of fixed assets will be credited to the car - 20%, for equipment - 10% per annum of the cost.

Required:

a) prepare a cash flow forecast (income and expenditure) for the next six months;

b) make a calculation of profit and loss and balance sheet for the next six months.