3.1. Part a) Clariton Antiques Ltd needs to produce a cash budget for the Banks in order to ensure that there is enough cash within the business to achieve the operational levels set by the functional budgets. The following sales forecast have been produced for the next six months.

2016/2017
November	150,000
December	150,000
January	300,000
February	450,000
March	600,000
April	300,000
May	300,000
June	75,000
July	150,000

Collection estimates obtained from the credit and collection department are as follows:

collected within the month of sale = 5 %

collected the month following the sale = 80 %

collected the second month following the sale = 15 %

Total payments for six months to June 2017 is provided as follows;

January	807,250
February	137,250
March	119,750
April	437,250
May	227,250
June	219,750

The cash on hand on 1st january 2017 will amount to 110,000

Required:

prepare an analyses of the cash budget for clariton Antiques and advice on decisions that can be taken to improve their financial Position.

Part b)

Clariton has conducted a financial analysis of two investment projects overseas. At this stage it would only be possible to fund one of the two proposed projects.The costs of capital is very high because of inflation at 14% and clariton has presented the following figures to you for your consideration. Details of cash inflows have only been presented for 6 years as it is considered that financial information after this date is likely to be highly inaccurate.

Clariton has decided that the investments will only be considered if they meet the following criteria:

		Investment 1	Investment 2
Initial cost		8.6	4.4
Cash inflows
Year 1		1.6	0.8
Year 2		2.8	1.4
Year 3		3.4	2
Year 4		3.6	2.4
Year 5		4	2.3
Year 6		4.2	2.6

Required:

Assess the viability of the projects using investment appraisal techniques and state whether the options satisfy Peter's criteria for investment.

Part c)

Discuss the key components of financial statements:-

. Income statement . Statement of cashflows , Statement of changes in equity and gains . Statement of financial Position . Notes to the financial statement