Business report of financial exercise Essay Example | Topics and Well Written Essays - 2000 words

Business report of financial exercise - Essay Example To increase the revenue, the owner has decided that the firm will operate six days a week which will bring gross sales of  £15,000 in the upcoming year. We will analyze the implication of this change on the profit & loss statement in the light of reasonable assumptions. If the wages are calculated on the basis of increase in variable costs than the initial work demand was for 5 days which has now increased to 6 days therefore the rate of increase in variable costs will be It is found that advertising is correlated with sales and brand value of the organization (Eng & Keh, 2007). Therefore, we will assume that Advertising will increase respect to increase in percentage sales The local garage initially agreed on vehicle maintenance at a cost of  £500 per quarter. The terms initially might include that the business will operate for 5 days. Now since the business will be operating for six days therefore the contract costs will increase to  £600 per quarter. The cash flow forecast for year 2008 and 2009 can be implemented based on the future income statements. In this section we have provided the cash flow forecast for 2007 this will serve as the guideline for future cash flows based on the future assumptions. The cash flow analysis can be and income statements have revealed important information with regards to the community travel. Although the new change seems to be feasible, but it should be implemented in the proposed way by hiring two new part-time drivers who can fulfill the needs on Saturdays. Similarly if the full time employees are willing to work on the compensation terms than they should be hired since they have relevant expertise of the organization. If the business flows in the way as it was doing without any credit sales than it will have abundant cash at the end of the cycle which can be used to expand the business. However, as we noted small changes such as delays in payments or increase in