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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

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 29th 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. (15 marks).

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