The Emmbrook School Business & Economics Department

CASH FLOW FORECAST.

ASFC Enterprises was incorporated in December 2014. In that month 20,000 shares at £1 each were issued
and fully paid-up in cash. It was proposed to commence trading on 1st January 2015, when £18,000 was
paid for fixed assets (mostly machinery).

Estimated sales & purchases for January to June 2004.

SALES (£) PURCHASES(£)

January 5000 4000

February 10000 8000
March 30000 24000
April 30000 24000
May 30000 24000
June 30000 24000

NB

1. It was expected that debtors would pay for their goods 2 months after that in which they were sold.
ie. sales in January would be paid for in March.
2. ASFC would pay their creditors for purchases in the month after that in which they were bought.

 Wages & salaries will amount to £2000

 General expenses £600 per month.
 Both will be paid in the month in which they were incurred.
 Electricity bill is estimated at £225 per quarter. The first bill is expected in February.

TASK.

1. Prepare a 6-month cash flow forecast for ASFC commencing January 2015. (8
marks)

2. Calculate the new cash flow forecast taking into account the following changes:

 Wages & salaries will increase by 20% for January, March, and May
 General expenses will decrease by 5% each month.
 Both wages and general expenses will be paid in the month in which they were incurred.
 Electricity bill is estimated at £345 per quarter. The first bill is expected in February.

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

Jan
Feb Mar Apr May Jun
The Emmbrook School Business & Economics Department

Income/Receipts

TOTAL INFLOWS

Outgoings/payments

TOTAL OUTFLOWS

Net
Net cashflow

Opening balance

Closing balance