Q16. Frankie is thinking of starting up a marketing consultancy business. He has provided you, his financial consultant, with his predicted cash budget for the first six months. The level of consultancy work undertaken in month 6 is indicative of the monthly work Frankie expects going forward.

Frankie
Cash Budget Months 1-6		1	2	3	4	5	6
Cash Inflows
Consultancy fees - cash		4000	4000	6000	6000	6000	6000
Consultancy fees - credit			1000	1000	1500	1500	1500
Bank loan					6000
Total inflows		4000	5000	7000	13500	7500	7500
Cash outflows
Stationery			4500
Lease		18000
Skoda		600			2700
Secretarial expenses		1200	1200	1200	1200	1200	1200
Operating costs		2400	2400	2400	2400	2400	2400
Total outflows		22200	8100	3600	6300	3600	3600
Opening cash		20000	1800	-1300	2100	9300	13200
Net cash flow		-18200	-3100	3400	7200	3900	3900
Closing cash		1800	-1300	2100	9300	13200	17100

Answer on:

your findings from the cash budget and

advises him as to whether, or not, he should go into business.