Question 1

The CEO of Skinny Ltd, Mr Skinny has come to see you because he heard you were doing AF208. He indicates that his firm is under financial stress for several months. He cant sleep and has stress all the time. The doctor has told him that he now has high blood pressure. He wants your advice on how to deal with cash flow problems his company is facing. His banks have refused any further loans and no one else will advance any loan. He has presented you with an extract of his recent balance sheet below.

State of Financial Position of Skinny Ltd

As at 29^th November 2021

Assets	$	$
Cash		$2 000
Debtors		$30 000
Inventory		$46 000
Vehicles		$38 000
Plant and Equipment		$29 000
Total Assets		$145 000
Liabilities
Overdraft		$6 500
Bank loan		$15 600
Creditors		$8 500
Total Liabilities		$30 600
Net Assets		$114 400
Equity
Shareholders Funds	$100 000
Retained earnings	$14 400	$114 400

Required:

Outline five actions that Skinny can take to improve his cash flow.