a) A cash flow forecast is a prediction of all expected receipts/expenditures over A period of time. It shows the expected cash balance at the end of every month.
b)Receipts, Payments, Net Cash Flow, Opening balance-5000-(1800)-(700)-(100)-900-1900-2400-2000-1000, Closing Balance-(1800)-(700)-(100)-90-1900-2400-2000-1000-(400)
c) i) The cash position starts off negative (obviously), because of all the start-up Expenses. However, given the warm weather (ideal for her business), it is Positive by July. However, as the months get colder, she stops making a profit And her closing balance in December is, once again, negative.
ii) The business will be in bad shape in early 2008. They are already in a Negative balance by the end of 2007, and they will not be making money until The weather gets warmer, at which point the cash position will be negative and May take some time to recover.
d) * Make the exact same chart as in (b), but add 1200 to other payments in April (total payments rise to 8000; net cash flow is (8000)), and subtract 1300 from June receipts (total receipts decrease to 700; net cash flow is (700)).
e) It is unlikely that she gets the loan based on the new forecast given that she Now has 1200 extra to make up for through her business. Also, in losing 1300 In receipts in June, her business takes a big hit. By the time her balance is Positive (if ever), winter will have come and she will start losing money once Again, therefore not making any profit until the following year. If she would Like a loan, she may have to extend this forecast into the following year to Prove that eventually her business will pick up and she will be able to pay back The loan. She could also manipulate the cash inflows to be more than she truly Expects them to be for her balance to be positive.