Comprehensive Case Comprehensive Case Salaries S. Stella's Office Supply Business Stella is planning to buy an office supply business. The purchase price S100.000, for which she will get the existing inventory (worth 515.000 cost), all the fixtures and fittings (worth about $10.000), and the goodwill of the store valued at $75.000) You have made the following estimates of activities for the first three months Month 1 Month 2 Month 3 Total Sales 52 5400 550.000 15.000 Cost of prods sold (0 of sales revene) 150X 24000 Cromarga 5 10000 5 000 520000 5.000 Ses commission 5 2.500 $4.000 55.000 5 11.50 5.000 5.000 15.000 Rent 2000 3.000 2.000 000 Utilities SHO Cleaning 20 Depreciation 200 MO 100 100 Total expenses 5105 512.000 513.0005355 Operating profil 500) 4 57000 5100 Locionet il Net income 5 (500) 500 5500 5750 Owner's with 52500) S (2500) 5 (200) 5 50 Change in wet's quity 5. 0005 500 $2.500 - Stella figures that she has 5112.500, which will be enough to buy the business and give her a $12.500 working capital. As she is cxpecting small loss in Month 1, and she is only planning to take out what the bar ness cars in profit, she should be OK in respect of cash management and liquidity She will be able to get one month credit on het purchases, but she will need to carry inventory at the end of each month sufficient to moet the following month's ales Half the customers will pay ish for the goods they buy the other half will take one month's credit Rent is paid monthly in advance, with first and last due on the first day of Month 1. Insurance is paid annually in advance. Utilities are paid monthly one month in arrears An other cash capemes are paid in the month they are incurred. Required Ace Stella on whether her business will peosper or not. 5 5 321