Analysis of cash flow for a small business

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Reference no: EM13953344

Analysis of Cash Flow for a Small Business

Charles, a financial consultant, has been self-employed for two years. His list of clients has grown, and he is earning a reputation as a shrewd investor. Charles rents a small office, uses the pool sec- retarial services, and has purchased a car that he is depreciating over three years. The following income statements cover Charles's first two years of business:

Year 1 Year 2

Commissions revenue	$ 25,000	$65,000
Rent	$ 12,000	$12,000
Secretarial services	3,000	9,000
Car expenses, gas, insurance	6,000	6,500
Depreciation	15,000	15,000
Net income	$(11,000)	$22,500

Charles believes that he should earn more than $11,500 for working very hard for two years. He is thinking about going to work for an investment firm where he can earn $40,000 per year. What would you advise Charles to do?

Reference no: EM13953344

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