Activity 2

Task 5

Task 6

Task 4

Matt and Katie estimate that the pattern of sales, over a year, at the new store will be similar to that at the Westwood store.  Therefore they are projecting that the income for rentals, sales and confectionery over the first year will be in the following proportions to the 2010 figures for the Westwood store:

 The payments that they will have to make are:

• an annual wage bill of £53,000 split evenly over the year

• stock purchases of £10,000 in the first quarter and then £3,000 per quarter after that

• advertising costs of £5,000 in the first quarter and then £1,000 in the second and fourth quarters and £500 in the third quarter

• other costs of £850 per quarter

1. Using all of the information above prepare a cash flow forecast for the new Highlea store for the next 12 months.

2. Prepare a chart from the cash flow forecast use this and the figures to analyse the projected performance of the Highlea store over the first 12 months.  How might Matt and Katie use the cash flow forecast when meeting with their bank manager?