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    3.7: Cash Flow: Activity: Anubis

    Uploaded by

    Jornarnod
    The document provides a case study and cash flow forecast for Anubis, a sole proprietorship business run by Tom that sells phone cases online. It gives monthly cash outflow projections for January to March 2018 including wages, packaging, delivery charges, and cost of goods sold. Additionally, it provides opening cash balance, monthly sales revenue, and quarterly rent information. The document then asks to outline two external short-term financing sources and prepare a fully labeled three-month cash flow forecast for Anubis. The cash flow forecast shows a worsening closing balance each month from $2000 to $1000 to $-3000 in March, indicating dire financial circumstances for the business.

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    3.7: Cash Flow: Activity: Anubis

    Uploaded by

    Jornarnod
    3K views3 pages
    The document provides a case study and cash flow forecast for Anubis, a sole proprietorship business run by Tom that sells phone cases online. It gives monthly cash outflow projections for January to March 2018 including wages, packaging, delivery charges, and cost of goods sold. Additionally, it provides opening cash balance, monthly sales revenue, and quarterly rent information. The document then asks to outline two external short-term financing sources and prepare a fully labeled three-month cash flow forecast for Anubis. The cash flow forecast shows a worsening closing balance each month from $2000 to $1000 to $-3000 in March, indicating dire financial circumstances for the business.

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    The document provides a case study and cash flow forecast for Anubis, a sole proprietorship business run by Tom that sells phone cases online. It gives monthly cash outflow projections for January to March 2018 including wages, packaging, delivery charges, and cost of goods sold. Additionally, it provides opening cash balance, monthly sales revenue, and quarterly rent information. The document then asks to outline two external short-term financing sources and prepare a fully labeled three-month cash flow forecast for Anubis. The cash flow forecast shows a worsening closing balance each month from $2000 to $1000 to $-3000 in March, indicating dire financial circumstances for the business.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3K views3 pages

    3.7: Cash Flow: Activity: Anubis

    Uploaded by

    Jornarnod
    The document provides a case study and cash flow forecast for Anubis, a sole proprietorship business run by Tom that sells phone cases online. It gives monthly cash outflow projections for January to March 2018 including wages, packaging, delivery charges, and cost of goods sold. Additionally, it provides opening cash balance, monthly sales revenue, and quarterly rent information. The document then asks to outline two external short-term financing sources and prepare a fully labeled three-month cash flow forecast for Anubis. The cash flow forecast shows a worsening closing balance each month from $2000 to $1000 to $-3000 in March, indicating dire financial circumstances for the business.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    The case study provides information about Anubis, a sole proprietorship business that sells phone cases. It gives financial details like monthly expenses, revenue, and opening balances to develop a cash flow forecast for the first quarter of 2018.

    Bank overdraft and trade credit.

    See cash flow forecast on page 2.

    IB Business Management – Finance and Accounts

    3.7: Cash Flow: Activity

    3.3 CASH FLOW FORECAST: ACTIVITY (Past Paper)

    Read the case study information below and answer the questions that follow.

    ANUBIS

    Tom operates Anubis as a sole trader,


    selling cell/mobile phone cases on the
    internet. The market is increasingly
    competitive. The retail price of phone
    cases is predicted to fall in the second
    quarter of 2018. Employees at Anubis
    will receive a 3 % rise in wages starting
    from 1 April 2018.

    Tom has forecasted the following monthly cash outflows for January through March 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 January 2018: $8000.
    ● Sales revenue: $300 000 each month.
    ● Rent of $2000 paid quarterly: first payment in January 2018.
    ● Receipt of a tax refund in February 2018: $3000.
    QUESTIONS: 10 MARKS, 30 MINUTES

    1. Outline two appropriate external short-term sources of finance for Anubis other than loans
    from family and friends.
    [2 marks]
    External and short-term sources of finance
    Bank Overdraft
    Trade credit _ delay payment bills
    Debt- factoring - taking checks immediately but pay more later
    Short term bank loan

    2. Using the information above, prepare a fully labelled cash-flow forecast for Anubis from
    January to March 2018.
    [5 marks]

    2018

    January February March

    Opening balance 8000 2000 1000

    Cash Received

    Sales 300 000 300 000 300 000

    Tax Refund 3000

    Total cash received 300 000 303 000 300 000

    Expenditure

    Wages 50 000 50 000 50 000

    General Operation
    Rent 2000 - -

    Heating and lighting 4000 4000 4000

    Product

    Packages 15 000 15 000 15 000

    Cost of product 220 000 220 000 220 000

    Delivery 15 000 15 000 15 000


    [5 % of sales revenue]

    Total Expenditure 306 000 304 000 304 000

    Total Cashflow -6000 -1000 -4000


    TOTAL CASH RECEIVED-
    TOTAL EXPENDITURE

    Closing Balance 2000 1000 -3000


    OPENING BALANCE-
    TOTAL CASHFLOW

    3. Comment on the predicted cash flow for Anubis for 2018. [3 marks]

    All in all, the cash flow forecast is not looking good for Anubis. Even though the forecast
    covers the first three months of 2018, looking closely we can notice that the closing balance
    worsens each month from 2000 to 1000 and flunked at -3000, which is considered a negative
    in the month of March. Anubis faces lower gross profit due to the fact they have a lower
    retail prices of phone cases than their wage costs which is quite high. With the problem that
    the market is increasingly competitive, Anubis most likely would not be able to generate any
    additional sales revenue to offset the lower gross profit margin. Due to all this, we can say
    that the situation with Anubis is incredibly dire.

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