You are preparing a plan for your new business, Neptune Ltd. A potential investor has asked you to produce a cash flow forecast for their first six months of trading. The company will start trading on January 1^st 20X1. You have the following information:

• The business will be started in January with 180,000 of share capital
• Non-current assets will be purchased in the following months 96,000 in January, 72,000 in March and 36,000 in May.
• Sales are to be 140,000 per month for the first three months and 200,000 per month for the next three months.
• Customers are to be given three months credit so sales in January will be paid in April.
• Components are 25% of sales value and paid in the following month they are purchased.
• Fixed production overheads are 10,000 per month
• Variable production overheads are 5% of sales value
• Wages and salaries are 10% of sales value per month
• Royalties are 2.5% of sales value per month
• Depreciation is charged on a straight-line basis and assets have a five-year life with no scrap value.

You are required to:

Produce a cash flow forecast for the first six months of trading
Calculate the companys profit before tax for the period
Make five recommendations, which could improve their cash flow position