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)