Discuss the crucial importance of cash to a business

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Reference no: EM133114565 , Length: word count:2500

Task 1: Kashi is preparing the cash budget for the first 3 months of her business's trading. Business is called Kashi textiles and Kashi will be investing £25,000 of her personal savings to get it started. Rest of the information is as follows:

a. In January 2022, Kashi will purchase a computer and a printer for use in the business for £1,980, payable upfront.

b. Kashi expects to sell the following textiles:
January                  £4,500 to Moon Traders
February              £6,890 to Hans Traders
March                    £5,670 to Down Town shops.

c. Kashi expects to make the following purchases of textiles over the next three months:

January                £E3,280 for Moon Traders supplies
February               £5,120 for Hans Traders supplies
March                  £4,100 for Down Town shops' supplies

d. All sales will be made for cash.

e. Purchases: 10% payment in the same month, 50% payment next month and remaining payment in 2 months' time.

f. Kashi will need to hire a printing machine to print her logos and the hiring charges will be £250 per month, payable in the same month. Hiring will be made in January and will be needed for all the subsequent trading months.

g. Kashi has agreed to pay £250 per month to an accountant for his advice and preparation of accounts.

h. Other expenses have been estimated as follows:
£100 on delivery costs per month, payable at the end of each month.
£425 on telephone costs per quarter, payable at the end of the quarter.
£250 on other expenses, such as electricity and insurance, payable at the end of each month.

Q: Prepare the cash budget for Kashi textiles for first 3 months' of trading from January to March, 2022.

Show your workings separately.

Task 2

Q1: Define a Company. Explain its features and also explain advantages and disadvantages of forming a public company.

Q2: Discuss the crucial importance of cash to a business. Is the profit that a business makes a reliable indicator of its cash balances?

Q3: What is the reason for the existence of Corporate Governance? Discuss some principles of good governance as described by the Corporate Governance Code.

Q4: Define Gearing and explain its advantages and disadvantages. Why might a bank be interested in a company's level of gearing?

Reference no: EM133114565

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