Ruth is planning to start a hairdressing business

Ruth is planning to start a hairdressing business in Sunderland. She has been asked by her bank to provide a cash flow forecast. She has nearly finished it. March April May June July August Cash at start £ 12, 000 £ 7, 000 (£ 2, 000) (£ 5, 000) (£ 2, 000) Cash in £ 0 £ 12, 000 £ 16, 000 £ 20, 000 Cash out £ 5, 000 £ 9, 000 £ 15, 000 £ 16, 000 Net cash flow (£ 5, 000) -£ 9, 000 -£ 3, 000 £ 3, 000 Cash at month end £ 7, 000 -£ 2, 000 -£ 5, 000 (£ 5, 000) (£ 2, 000) £ 1, 000 £ 17, 000 £ 20, 000 £ 17, 000 On the basis of the cash flow data, do you think Ruth should go ahead with her hairdressing business or not? Pick the 2 points that give the strongest support that she should go ahead If Yes, it’s mainly because: 1. The business looks set to make an annual profit of £ 48, 000 2. She nearly recovers her start-up capital within 6 months 3. Her sales income looks likely to be £ 240, 000 a year 4. She makes a £ 1, 000 profit in the first 6 months 5. The business makes positive cash flow from month 5 6. She has turned £ 12, 000 into £ 13, 000 in just 6 months 7. She should ignore the figures as long as she finds the work interesting.

Ruth is planning to start a hairdressing business in Sunderland. She has been asked by her bank to provide a cash flow forecast. She has nearly finished it. March April May June July August Cash at start £ 12, 000 £ 7, 000 (£ 2, 000) (£ 5, 000) (£ 2, 000) Cash in £ 0 £ 12, 000 £ 16, 000 £ 20, 000 Cash out £ 5, 000 £ 9, 000 £ 15, 000 £ 16, 000 Net cash flow (£ 5, 000) -£ 9, 000 -£ 3, 000 £ 3, 000 Cash at month end £ 7, 000 -£ 2, 000 -£ 5, 000 (£ 5, 000) (£ 2, 000) £ 1, 000 £ 17, 000 £ 20, 000 £ 17, 000 On the basis of the cash flow data, do you think Ruth should go ahead with her hairdressing business or not? Choose yes or no, then pick the 2 points that give the strongest support for your view. If Yes, it’s mainly because: 1. The business looks set to make an annual profit of £ 48, 000 2. She nearly recovers her start-up capital within 6 months 3. • Her sales income looks likely to be £ 240, 000 a year 4. She makes a £ 1, 000 profit in the first 6 months 5. • The business makes positive cash flow from month 5 6. She has turned £ 12, 000 into £ 13, 000 in just 6 months 7. She should ignore the figures as long as she finds the work interesting.