Question
A local retail and wholesale business has 4,500 on their bank account on Monday. During the day, they buy 500 products for their inventory for
A local retail and wholesale business has 4,500 on their bank account on Monday. During the day, they buy 500 products for their inventory for cash. Each unit costs 4.50. During the day they sell 150 units at 10 each. 60% of their customers pay cash and the remaining 40% get 2 weeks of credit. On the same day, the business pays 80 for a telephone bill for the last month, and receives 400 from a trade receivable. Use the above information to answer the following: i) How much cash does the business have at the end of Monday? How much profit have they made during the day? You MUST show your workings. (3 marks) ii) Explain how cash is different from profit and discuss whether a profitable company may run out of cash. Use at least two relevant examples to illustrate your answer (examples are not limited to the company above). Up to 250 words.
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