Business accounting Essay

M1 Analyse the cash cling enigmas a business might experience. For this task I will be writing to Alan Hall with an analysis of the problems in his cash flow argumentation. sound Mr Hall, I experience made an analysis of your cash flow dictation and am writing to you to inform you about all the problems I have identified Trends on the Net Cash Flow counterpoisesThere atomic number 18 many trends within the cash flow statement such as the constant increase in advertising rates of 175 up until September where it increases. It was wise to increase it more in Christmas, but this shouldve carried on into January as it is a new year and a time to grass off any stock that may have re mained. The other problem I have identified within Alan halls cash flow statement is the Mortgage, which is fixed. This was wise to keep fixed as the business may non be able to afford any changes that may lead in an increase in cash outflow. I have identified a problem in thewages the wages has incr eased twice In June. both were increased in June, once by 400 in the wages. The surplus wages were increased by 750, which makes a total of 1050 increase in June which may be due to growth in employees. Most expenses are fixed such as rent, the expenses such as purchases and Advertisements are nevertheless rising immensely hence causing the closing proportion to be negative patronage the continuous rise in sales.The purchases are the main expenditure, which is huge area of concern, these needs to be looked into and controlled. The most common purchases are 27,000 and the most expensive one 44,000 hence needs to be looked into to chance upon sources why so changes can be made. There is a pompousness lend of 9000 in the month of March, from a vehicle that was purchased. This lump sum causes the March closing sense of equilibrium to be a negative oddment of -2,645 causing the cash flow to have a bank overdraft. disconfirming Closing balancesThe closing balances were decent and positive until April where the closing balance became -1,654. The curtilage for this may be the decrease in sales by 2520 in March, despite at that place being an extra inflow from the bank and nest egg of 8000. The reason of there being a negative closing balance must be from the lump sum of 9000 outflow, which was due to a vehicle purchase. The negative closing balance continues into the month of May despite there being a increase of 6300 on sales, the negative closing balance remains due to the rise in purchases of 4500. The negative closing balance becomes constant throughout the whole year and only gets higher despite the sales rising due to the expenses. The highest negative closing balance is in October of -12730 despite there being high sales in September. The reason for this was again the increase in outflow of 5760.