Business SL (FE2016)
Paper 2
Questions Attempted 0/1
Business SL (FE2016)
Available time 20 Minute(s)
01

Coral Fragrances (CF)

Paper 2
:
Available time 20 Minute(s)
01. Question
Level Medium
Maximum Mark 10
View Data Booklet
Report a bug
Tell us how we can help

Abdullah operates Coral Fragrances (CF) as a sole trader, selling perfume bottles on the internet. The market is increasingly competitive. The retail price of perfume bottles is predicted to fall in the second quarter of 2018. Employees at CF will receive a 3 % rise in wages starting from 1 October 2018.

Tom has forecasted the following monthly cash outflows for July through September 2018:

  • Heating and lighting: $4000.
  • Wages: $50 000.
  • Packaging: $15 000.
  • Delivery charges: 5 % of sales revenue.
  • Cost of goods sold: $220 000.

Additional information:

  • Opening balance on 1 July 2018: $8000.
  • Sales revenue: $300 000 each month.
  • Rent of $2000 paid quarterly: first payment in July 2018.
  • Receipt of a tax refund in August 2018: $3000.

(a). Outline two appropriate external short-term sources of finance for CF other than loans from family and friends.

[Marks: 2]

(b). Using the information above, prepare a fully labelled cash-flow forecast for CF from July to September 2018.

[Marks: 5]

(c). Comment on the predicted cash flow for CF for 2018.

[Marks: 3]
Loading...