Daniel’s Farm shop is located outside Swindon, Wiltshire. He has problems with his cash flow. Every month he has expenses to pay such as equipment or staff wages.

Below is the relevant information

• At the start of January, Daniel receives an investment of £10,000

• Credit sales from sales took place in previous months to be received as follows: January £2,500 and subsequently £10,000 each month from February to June.

• Daniel constructed shelves for the shop in January. The project materials cost £15,000 which will be paid at £3,000 instalments starting from February.

• The sub-contract labor for the project cost £24,000, which will be paid at £4,000 instalments starting from January.

• Daniel signed a contract with a marketing agency for their services at a cost of £3,000 which will be paid at £500 monthly from January.

• A refrigerator worth £5,000 was purchased. The supplier agreed that Daniel can pay twice. The first payment of £2,500 will be January and the second in April.

• Daniel employed one full time worker, all year round, Daniel pays him £1,000 a month

• Other monthly cost which includes two extra workers, he pays them £500 each.

(Hint: Cash flow forecast covers from January to June)

Requirements:

1. You are required to help Daniel manage his finance by completing his cash flow forecast

for him. 

2. Identify any problems in Daniel’s cash flow forecasts and suggest actions that he could

take to avoid the problems?