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Activity 2:

The finance director of Cool-it Ltd is putting together the business's cash-flow forecast for the coming year. The Australian-based business's sales are growing strongly, and there is a need to manage cash flow carefully. It is particularly important to manage trade receivables carefully. Table 1 sets out an incomplete cash-flow forecast for Cool-it Ltd for the coming year.

Table 1: Incomplete cash-flow forecast for Cool-it Ltd for the coming year

\begin{tabular}{|l|c|c|c|c|c|c|}
\hline
\multicolumn{1}{|c|}{\[tex]$ \$[/tex] \prime 000s} & Jan & Feb & Mar & Apr & May & Jun \\
\hline
Cash inflow & & & & & & \\
\hline
Receipts & 18 & 18 & 20 & 21 & 22 & 23 \\
\hline
Total inflow & 18 & 18 & 20 & 21 & 22 & 23 \\
\hline
Cash outflow & & & & & & \\
\hline
Payments & 12 & 22 & 13 & 18 & 15 & 16 \\
\hline
Total outflow & 12 & 22 & 13 & 18 & 15 & 16 \\
\hline
Net cash flow & 6 & -4 & 7 & 3 & 7 & 7 \\
\hline
Opening balance & 4 & 10 & 6 & 10 & 13 & 20 \\
\hline
Closing balance & 10 & 6 & 13 & 10 & 20 & 23 \\
\hline
\end{tabular}



Answer :

GinnyAnswer
Certainly! Let's complete the cash-flow forecast step-by-step.

### Step-by-Step Solution

1. Given Data:
- Receipts: 18, 18, 20, 21, 22, 23
- Payments: 12, 22, 13, 18, 15, 16
- Net Cash Flow: 6, (14), 7, 3, (A), 7
- Opening Balance: 4, 10, 6, (C), (D), 2
- Closing Balance: 10, 6, 13, (F), (E), 23

2. Identify Net Cash Flow:
- Net Cash Flow = Receipts - Payments
- Jan: 18 - 12 = 6 (Already given)
- Feb: Given as (14), likely correct value (10 - (-4) = 14 is incorrect).
- Mar: 20 - 13 = 7 (Already given)
- Apr: 21 - 18 = 3 (Already given)
- May: 22 - 15 = 7 (Let's assume A = 7)
- Jun: 23 - 16 = 7 (Already given)

3. Identify Closing Balances:
- Closing Balance = Opening Balance + Net Cash Flow
- Jan: 4 + 6 = 10 (Given correctly as 10)
- Feb: 10 - 4 = 6 (Given correctly as 6)
- Mar: 6 + 7 = 13 (Given correctly as 13)
- Apr: 6 + 3 = 9 (Assuming F = 9)
- May: 9 + 7 = 16 (Assuming E = 23; Need correction since closing balance & payment not matching)
- Jun: Given correctly as 23

4. Identify Opening Balances:
- Opening Balance = Closing Balance of the previous month
- Jan: 4 (Given)
- Feb: 10 (Given)
- Mar: 6 (Given)
- Apr: 13 (C)
- May: (D)
- Jun: 9 (Next Month)

5. Closing balance calculation:
- Closing Balance = Opening Balance + Net Cash Flow
- Jan : Closing balance = 4 + 6 = 10
- Feb: Closing balance = 10 - 4 = 6
- Mar: Closing balance = 6 + 7 = 13
- Apr: Closing balance = 6+ 3 = 9 (Assuming F = 9)
- May: Closing balance = 9 + 7 = 16(Assuming 16 since payments not match) 2 + 7 = 9
- Jun: 2 = 23 -7 => 16 (a mismatch)

### Using above into
\begin{tabular}{|l|c|c|c|c|c|c|}
\hline \multicolumn{1}{|c|}{[tex]$\$[/tex] \[tex]$ \prime 000$[/tex] s } & Jan & Feb & Mar & Apr & May & Jun \\
\hline Cash inflow & & & & & & \\
\hline Receipts & 18 & 18 & 20 & 21 & 22 & 23 \\
\hline Total inflow & 18 & 18 & 20 & 21 & 22 & 23 \\
\hline Cash outflow & & & & & & \\
\hline Payments & 12 & 22 & 13 & 18 & 15 &16 \\
\hline Total outflow & 12 & 22 & 13 & 18 & 15 & 16 \\
\hline Net cash flow & 6 & -4 & 7 & 3 & 7 &7 \\
\hline Opening balance & 4 & 10 & 6 &13 & 2 & 9\\
\hline Closing balance & 10 & 6 & 13 &9 & 16 & 23 \\
\hline
\end{tabular}

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