Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
ZumGo is a partnership run by two brothers, Richie and Justin. It offers bus tours for holidaymakers. After two profitable years, Justin wants the business to grow by purchasing another bus. The bus will cost $28 000. When Richie prepared ZumGo’s cash flow forecast as part of the business plan, he left out the $6000 for advertising in March. They cannot agree whether to lease the bus or use all of their retained profit to buy it. Leasing would cost $1000 per month for 2 years.
(a)[2]
What does the term ‘business plan’ mean?
(b)[2]
Identify two financial documents, other than a cash flow forecast, that a business could use.
(c)[4]
Calculate W, X, Y and Z.
(d)[6]
Identify and explain one benefit and one drawback of ZumGo being a business partnership.
(e)[6]
Which source of finance do you think ZumGo should choose for the new bus? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A document containing aims and the key details of operations, finance and ownership” …