1.You are the co-founder of ACME Toy Company, which has been trading for the past two years. You have now made the decision to seek extemal investment into the company to expand into overseas markets. As part ofthe due diligence process, potential investors have asked you to prepare a cash flow statement for the quarter four (October, November, December) 2016. Your records show ACME Toy Company will have the following balances on the Ist October 2016: Bank overdraft 300,000 Debtors 150,000 100,000 In addition, you anticipate the following transactions during the next three months: i. New bank loan of 300,000 to cover present overdraft on the 1" October 2016 to be repaid 40.000 every quarter starting 31 December 2016 ii. Sales and purchases as follows: Sales Purchases October 100,000 70,000 November 160.000 80.000 I December 180,000 100,000 iii. Payroll costs of 40,000 each month. iiii. Outsourced safety testing ofe25,000 in October and a further 25.000 in December, paid at the end of the month in which the cost is incurred. v New design right filing costs of 5,000 in November 2016, with ongoing IP fees of 1,000 per month. vi. Advertising & Promotion costs of 10.000 per month, with an additional charge of 25,000 in December to cover additional Christmas promotion costs. vii. Debtors and creditors must cleared within the month. Required: a) Prepare a cash budget for the three month period ending 31 December 2016. b) Is there any month when the cash outflows exceed the cash inflows? If so what month, and given the sector in which the company trades in, is that what would be expected? c What level of investment would be required in order to have a closing balance of the 31 March 2016 ofE700,000? d) What are the advantages of preparing a cash flow statement