To begin your report, provide an introduction that explains the purpose of cash flow forecasts and highlights the distinctions between a cash flow forecast and a cash flow statement. Subsequently, delve into the significance and limitations of break-even analysis, outlining the calculations involved and creating a comprehensive break-even chart with appropriate labels.

Next, employ the following data from Acacia Furniture to generate a cash flow forecast and break-even analysis for the business. Your task is to showcase the potential risks faced by Acacia Furniture by altering costs and sales figures. By conducting a subsequent cash flow forecast and break-even analysis, you should effectively demonstrate the impact of these changes on the financial position of the business. All forecasts provided must be meticulously accurate.

By successfully completing this task, you will demonstrate your proficiency in financial planning, as well as your ability to analyze and assess the financial health of a business under varying circumstances. This will enable the management team at Acacia Furniture to evaluate your capabilities and suitability for the role of Finance Assistant effectively.

Break Even Analysis

Acacia furniture sells chairs at AED 100 each and sales for the month are 500 units. His fixed costs total AED 20 000 and his variable costs included Paint=AED 10 Per Chair, Wood AED 25 Per Chair= Labor 15 Per Chair.

Number of chairs sold	Total revenue	Fixed costs	Variable costs	Total costs	Profit/Loss
0
100
200
300
400
500
600
700

1. Acacia Furniture believes that the cost of the rent of the store will increase and therefore fixed costs will rise to AED 30,000 per year and mark up is 20%. While other things remain same

• Construct a new break-even table and draw a new break-even chart showing how this change in fixed costs will affect the OAK break-even point.

1. Going back to the original situation, an increase in the cost of raw materials leads Oak Furniture to believe that the variable cost of each chair will rise to AED 60 per chair and mark up is 20% While other things remain same

• Construct a new break-even table and draw a new break-even chart showing how this change in variable costs will affect Acacia Furniture breakeven point.

1. Going back to the original situation, Acacia Furniture would like to know what would happen to its breakeven point if increased the selling price of chairs to AED 150 and mark up is 20%. While other things remain same

• Construct a new break-even table and draw a new break-even chart showing how this change in selling price will affect Acacia Furniture breakeven point.

You are required to prepare Cash flow forecast from January 2021 to December 2021 on the following information.

• Opening Balance is 25000/- while Sale for the month of January is 400 Chairs and increase by 10% every month from March to December.
• His fixed costs total AED 5,000/- Per month.
• Paint=AED 10 Per Chair, Wood AED 25 Per Chair and other Variable AED 10/- per Chair.
• Labor= AED 15/- Per Chair until June,2021 and after that increase by 10% in August 2021 and remain same in coming month until December 2021.
• Marketing expense AED 3000/- on quarterly basis in advance.

After preparing the above, management of Acaia furniture decide to make some changes and now again you are required to prepare Revised Cashflow forecast for the year January,2021 to December,2021 from the following information.

• Opening Balance is 20000/- while Sale for the month of January is 400 Chairs for the price of 80 Per chair and increase by 10% every month from March to December.
• His fixed costs total AED 6, 000 Per month.
• Paint=AED 10/- Per Chair, Wood AED 25/- Per Chair and other Variable AED 12/- per Chair.
• Labor =AED 15/- Per Chair until June and after that increase by 10% until October and again remain same in coming months until December.
• Marketing expense AED 3500/- on quarterly basis in advance.

Finally, you need to carry out an in-depth analysis of the potential financial risks you have identified from these forecasts and detail the actions that could be taken by the business to overcome these risks.