Case 3: The hardware dealer John, a retired plumber, runs a market stall selling tools and various DIY supplies When he started the business six months ago his starting stock was just 5,000 purchased with a 5,000 overdraft from the bank. He has now asked the bank to double the overdraft facility to 10,000, although this amount is a guess and he is not sure what level of overdraft he really needs. Like most traders he buys and sells all sorts of tools and hardware supplies, but John specialises in buying plumbing tools and supplies. He sells his goods through a network of weekly markets in and around the London area where he usually rents a stall for a total of 150 per week with his 5,000 starting stock he has so far made 12500 of sales achieving a 75 per cent profit margin on cost, i.e. on average he sells goods for 75 per cent more than he paid for them, including the transportation expense. However, he has run out of money to buy further stock, apart from that coming directly from sales. Hence he needs an increased overdraft. He calculates that his living costs are low reflecting his frugal standards, totalling 15,000 per year which includes running and paying for a suitable van. In his business, stock turn is a particularly important concept. From the facts, John's stock turn must be five, assuming the six months' business so far is representative. Sales of 12,500 in six months equal 25,000 in a year with a starting stock of 5,000 and 25,000 divided by 5,000 is five. This is typical of a business of this type. An t would enable him to increase his sock to 10,000 which, he hopes, would give sales of 50,000 per year, five times the stock. The question is whether this level of overdraft would make the business viable. If not what level of overdraft does he need? Case 3: The hardware dealer John, a retired plumber, runs a market stall selling tools and various DIY supplies When he started the business six months ago his starting stock was just 5,000 purchased with a 5,000 overdraft from the bank. He has now asked the bank to double the overdraft facility to 10,000, although this amount is a guess and he is not sure what level of overdraft he really needs. Like most traders he buys and sells all sorts of tools and hardware supplies, but John specialises in buying plumbing tools and supplies. He sells his goods through a network of weekly markets in and around the London area where he usually rents a stall for a total of 150 per week with his 5,000 starting stock he has so far made 12500 of sales achieving a 75 per cent profit margin on cost, i.e. on average he sells goods for 75 per cent more than he paid for them, including the transportation expense. However, he has run out of money to buy further stock, apart from that coming directly from sales. Hence he needs an increased overdraft. He calculates that his living costs are low reflecting his frugal standards, totalling 15,000 per year which includes running and paying for a suitable van. In his business, stock turn is a particularly important concept. From the facts, John's stock turn must be five, assuming the six months' business so far is representative. Sales of 12,500 in six months equal 25,000 in a year with a starting stock of 5,000 and 25,000 divided by 5,000 is five. This is typical of a business of this type. An t would enable him to increase his sock to 10,000 which, he hopes, would give sales of 50,000 per year, five times the stock. The question is whether this level of overdraft would make the business viable. If not what level of overdraft does he need