Jay Healy
Unit 5 Business Accounting
P3,M1 & D1
P3
BOB’S SPORTS BAR CASH FLOW FORECAST
FEBRUARY APRIL MAY JUNE TOTAL
JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY MARCH
OPENING (15,230) (12,600) (11,550) (10,370)
BALANCE 0 (19,820) (19,570) (19,390) (19,140) (17,960) (16,410) (13,280)
6,000 6,000 6,000 6,000 72,000
CASH IN 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
FOOTBALL 2,000 2,000 2,000 16,000
SEASON 2,000 2,000 2,000 2,000 2,000
1,000 1,000
WIMBELDON
NEW YEARS EVE 500
TICKETS 500
PRIVATE 1,000 1,000 2,000
SCREENING
9,000 8,000 8,000 8,000 91,500
TOTAL RECEIPTS 6,000 6,000 6,000 8,000 8,000 8,500 8,000 8,000
3,000 3,000 3,000 2,500 32,500
CASH OUT 2,000 2,000 2,000 3,000 3,000 3,000 3,000 3,000
1,000 1,000 1,000 1,000 12,000
WAGES 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
JUKEBOX/ FRUIT 6,000
MACHINE 500 500 500 500 500 500 500 500 500 500 500 500
18,000
MORTGAGES 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
BILLS 750 750 750 750 750 750 750 750 750 750 750 750 9,000
SKY 420
SUBSCRIPTION 70 70 70 70 70 70
ONE OFF 20,000
PAYMENT 20,000
500 1,000
LICENSE FEE 500
CAR 100 100
DECORATIONS
1,600
FOOTBALL 1,000 200
, Jay Healy
Unit 5 Business Accounting
P3,M1 & D1
ADVERTISMENT 200 200
7,050 6,950 6,820 6,750 100,620
TOTAL PAYMENTS 25,820 5,750 5,820 7,750 6,820 6,950 6,820 7,320
(13,280) (11,550) (10,370) (9,120) (9,120)
NET CASH FLOW (19,820) (19,570) (19,390) (19,140) (17,960) (16,410) (15,230) (12,600)
CLOSING
BALANCE (19,820) (19,570) (19,390) (19,140) (17,960) (16,410) (15,230) (13,280) (12,600) (11,550) (10,370) (9,120)
M1(Problem) & D1(Solution)
1.0 Introduction
In this report I will outline to Bob the problems that he is facing having looked at his cash flow forecast. With
each problem I find I will specify what the dangers of these problems have on his business in the coming
future and ways in which he can prevent these from happening next year. Attached to this report will be a
predicted cash flow forecast for next year with the necessary changes to Bobs spending.
2.0 Procedures
I will use Bobs cash flow forecast from 2017 which I created to refer to in order to see what he’s paying for,
how much he’s paying for it and when exactly he’s paying. This will allow me to spot certain areas where he
can improve in order to have a much more positive cash flow forecast in 2018.
3.0 Findings
Looking at Bobs cash flow forecast for 2017 we can see that Bob at the end of the 12 month forecast he has
made a loss of £9,120. I have picked out some key areas where he can change in order to turn that negative
number into a positive one.
Problem 1: Jukebox/ fruit machine
,Jay Healy
Unit 5 Business Accounting
P3,M1 & D1
Renting the jukebox and fruit machine I can see looks like a good deal as you’re getting two machines in one
go. But the problem I’m seeing is the fact that Bob is renting them. He needs to think about the price in the
long run because it is costing him £6,500 a year to rent these out and over the course of a couple of years
this figure is stupidly expensive; this is costing him dearly and he is wasting his money; and with wasted
money he is putting his business in jeopardy.
Solution 1: Buying a jukebox and a fruit machine
If he wants to continuously provide them in his bar every month then he may as well buy them and then he
won’t have to keep paying monthly for them. A juke box will cost him £500 (www.auna-multimedia.co.uk)
and a fruit machine will cost him £350 (www.m.ebay.co.uk/itm/DEAL-OR-NO-DEAL). This will overall cost him
£850, although it will cost him less for the month if he is serious about keeping them in his bar for the whole
year; well in the long run owning them will save him a whopping £5,650 (£6,500- £850) as he doesn’t have to
keep paying £500 every single month. After Bob has bought them he no longer has to pay £500 after every
month which will decrease the money he is spending which at the end of the year will increase his closing
balance edging it closer to a positive figure.
Solution 2: Only rent one
If Bob wasn’t keen on the idea of purchasing a juke box and/ or fruit machine then to save some sort of
money it would be ideal that he only rents one item. This would half the cost he is already paying to £250, if
he was to pay this throughout the whole year he would only be spending £3,250. With this price being half of
what he would have paid for, for both machine this would leave him with £3,250 to spare. This money can be
used for much more beneficial aspects of the business which for the health of the business is vital in keeping
his business afloat. The money will go towards the net cash flow at the end of the year.
Problem 2: One off payment
At the start of the year Bob has to pay a fixed amount of £20,000 pound for equipment such as tables, stools
and TV’s. This straight away puts him in a massive negative figure and throughout the year he is trying to
get that money back.
Solution 1: Spending less
Bob has to make 20,000 in order to pay off the money spent on equipment that is provided. But with the
money he is making it’s not going to be enough. So what if the amount he paid for equipment at the start of
, Jay Healy
Unit 5 Business Accounting
P3,M1 & D1
the year was lower than 20,000? It would be much easier for Bob to make his money back. Bob could easily
find cheaper equipment to use in his bar for a much cheaper price; after looking at some prices of online;
Bob could easily half the cost of what he is spending to rent out these pieces of equipment. If Bob was to go
out and buy the cheapest bits out there he would only end up spending roughly £10,000. And with this other
£10,000 saved this already puts his bar in a much healthier position as the money that needs to be made in
order to break even is much slimmer and much more manageable for the size of Bobs business.
Solution 2: Spreading the cost
Another alternative for Bob would be to ask the lender if he could pay the £20,000 over a longer period of
time. Instead of having to pay it back in 12 months Bob could ask to pay it back in 20 months; meaning he
can pay £1,000 per month, saving roughly £600 to if he was to pay it within 12. Even though he is paying
less the course of the payment is much longer but could be reduced depending on interest rates. And with
this longer period of time Bob has an extra 8 month to generate income in order to pay back that payment
which month by month puts his figures in good shape.
4.0 Bibliography
Jukebox-
Fruit machines-
