Business 7115 · O Level · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
LMA is a restaurant owned by a family. The business began 20 years ago and has stayed small. LMA operates as a partnership. The partners are considering whether LMA ought to convert into a private limited company. The Finance Manager is examining LMA’s cash-flow forecast. An extract appears in Table 2.1.
(a)[2]
Identify two reasons why a business could experience cash-flow difficulties.
(b)[2]
Calculate the values of X and Y.
(c)[4]
Identify four different examples of a cash inflow.
(d)[6]
Explain one advantage and one disadvantage that LMA would gain or face by becoming a private limited company.
(e)[6]
Explain two reasons why a business may stay small. Which reason is likely to be the most important? 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: “Excess inventory” …