A finance manager from TLC is trying to prepare a cash flow forecast for the years 2014–2016. The estimated sales are:
Year 2013 2014 2015 2016 2017
Sales (R) 20 mil 22 mil 24 mil 21 mil 25 mil
These sales will be made on three months’ credit and there will be no bad debts.
There are only three cost elements:
• First, wages amounting to R6 million per year
• Second, raw materials costing one- half of sales for the year. Raw material suppliers grant three months of credit
• Third, direct overhead (only incurred if the project is undertaken) at R5 million per year Start date: 01.01.2013.
Calculate the net operating cash flow for the years 2014–2016.