Answered step by step
Verified Expert Solution
Question
1 Approved Answer
a) Sam decides to start supplying coffees on credit to a number of large business clients. Moka provides coffees to each business and then gets
a) Sam decides to start supplying coffees on credit to a number of large business clients. Moka provides coffees to each business and then gets paid one month later. However Moka must pay its suppliers and staff immediately. Tables 1 and 2 show what happens over the next four months. Describe what you notice about the figures below and explain the problems Moka faces. (7 marks) Month 1 Total Month 2 Month 3 Month 4 Table 1: Monthly profits Sales revenue Cost of sales Operating expenses Profit $13,000 $6,750 $13,600 $7,250 $14,500 $7,750 $15,250 $8,000 $56,350 $29,750 $750 $1,150 $1,450 $1,300 $5,450 $4,650 $21,950 $5,500 $5,200 $5,800 Table 2: Four month cash flow Month 1 0 $7,500 Month 2 $13,000 $8,400 Month 3 $13,600 $9,050 Month 4 $14,500 $9,450 Total $41,100 $34,400 Receipts Payments Cash inflow/outflow Bank Balance $4,600 $4,550 $6,700 ($7,500) ($7,500) $5,050 $6,700 ($2,900) $1,650 b) Provide a simple plan to assist Moka in getting through any cash flow difficulties demonstrated in the above scenario. Discuss TWO strategies. (8 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started