What would be some concerns you might have before presenting

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Reference no: EM133327469

Case: You need to build a financial forecast for an application for a bank loan for your boss's company. You have the last 3 years worth of historical financial statements. The boss says to expect 20% growth in revenue next year and to expect the gross profit margin percentage to remain unchanged. This amount of growth will strain cash flow and your first attempt at a forecast shows a negative cash balance at the end of next year. The boss says to get aggressive on your AR and AP assumptions so that the forecast reflects positive ending cash.

Question 1) To increase cash at the end of the forecasted period would you increase or decrease Days Sales in AR (DSO) and would you increase or decrease Days Payables Outstanding (DPO) assumptions?

Question 2) If you change the days sales in AR (DSO) and/or the days payables outstanding (DPO), what would be some concerns you might have before presenting this forecast to the bank? Describe no less than 3 concerns and how you might address them.

Reference no: EM133327469

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