Question
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.
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