please read the text and analyze and answer these questions: How to

maximize cash inflows

Minimize costs for the business

Break-even analysis

Internal and external sources of finance

How to increase profits for business

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Skillen's is a small chain of indoor play zones. Typically, it leases a building on an industrial estate and fits it out with an indoor play area aimed at 3-11 year olds. It is popular with parents giving birthday parties for their children and for somewhere to go during the school holidays or at a weekend. There is a small bar and kitchen area in each outlet for the sale of tea, coffee and soft drinks to parents and children. Party food is also prepared and served, mainly for birthday parties.

The company has firm policies about payment designed to maximise cash inflows and minimise cash outflows. Parents booking parties have to pay a 20 per cent deposit on booking and then pay the balance a week in advance. Parents who bring their children individually pay at the door. Sometimes, a local business will book a party. Skillen's treats them like any other customers and does not give any credit. On the other hand, it has an unwritten policy of paying as many invoices as late as possible. It knows which suppliers put pressure to pay roughly on time and which suppliers are very lax in chasing up invoices.

Management at Skillen's knows that maximising cash inflows is key to also maximising profit. The manager of each outlet is expected to keep the outlet as busy as possible. For example, parents of children coming to birthday parties are given money off vouchers if they come with their children as individuals. Parents can buy season tickets. Less popular evenings are promoted in local newspapers with low entry prices. With high fixed costs, getting as much revenue as possible through flexible pricing is essential.

The main cost that can be varied is the labour cost. Most of the workers in the outlets are employed on the minimum wage. They tend to be young girls or working mothers. Many are casually employed. It is up to the manager to have the minimum level of staffing needed at any time in order to minimise cost. So the manager has to call in casual staff as and when they are needed. This has its disadvantages. Managers of outlets complain they spend too much time sorting out staffing. Casual workers also often lack training and commitment. This can lead to customers getting less than satisfactory service.