Forecasted Cash Flow of Alpha Pvt Ltd

This report presents the forecasted cash flow of Alpha Pvt Ltd, a house cleaning company, along with break-even point analysis and interpretation of financial statements.

Managing and Running a Small
Business

Executive Summary
This report is states about the Alpha Pvt ltd company, a newly established house
cleaning company. For the company to achieve success, the cash flow of the company is
being forecasted month wise for a year along with the break even point analysis. The
different regulations it is required to follow for attaining its objectives and goals along with
the rightful interpretation of the financial statements.

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................4
MAIN BODY.............................................................................................................................4
Forecasted cash flow of Alpha Pvt Ltd..................................................................................4
Application of break-even point.............................................................................................7
Interpretation of the key financial statements........................................................................8
Implication of key legislation and regulations on small businesses.......................................8
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................10
APPENDIX..............................................................................................................................11

INTRODUCTION
For starting anew business, it is very essential for the business to make some planning
in advance in respect to the cost of finance, revenue and so forth. This report presents about
the annualized cash flow forecast of Alpha Pvt Ltd, a house cleaning co., application break
even analysis, usefulness of financial statements and implication of regulation and legislator
on small businesses.
MAIN BODY
Forecasted cash flow of Alpha Pvt Ltd
Cash in
Month * Janu
ary
Feb
rua
ry
Ma
rch
Apr
il
Ma
y
Jun
e
Jul
y
Aug
ust
Sep
tem
ber
Oct
obe
r
Nov
em
ber
Dec
em
ber
Tot
al
Cash balance at
the start of each
month
£20,0
00
£14,
906
£15,
758
£21,
410
£25,
278
£31,
597
£29,
240
£29,
513
£29,
753
£31,
077
£36,
169
£32
,65
3
Operating
revenue
Cash receipts
from customers
£5,50
0
£5,7
50
£6,0
00
£6,1
00
£8,0
00
£8,5
00
£9,0
00
£9,0
00
£10,
000
£9,0
00
£8,5
00
£10
,00
0
£95,
350
Collection of
receivables
£5,00
0
£8,0
00
£10,
000
£11,
000
£13,
000
£4,0
46
£4,2
17
£4,4
75
£5,0
00
£8,0
00
£5,5
00
£7,
000
£85,
238
Other operating
revenue received £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Total
Operating
Revenue
£10,5
00
£13,
750
£16,
000
£17,
100
£21,
000
£12,
546
£13,
217
£13,
475
£15,
000
£17,
000
£14,
000
£17
,00
0
£1,8
0,58
8
Other Sources
of Cash Inflows
Proceeds from
sale of assets £0
Funds borrowed £20,
000
£20,
000
Total other
cash inflows £0 £20,
000 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £20,
000
Total monthly
cash in
£10,5
00
£33,
750
£16,
000
£17,
100
£21,
000
£12,
546
£13,
217
£13,
475
£15,
000
£17,
000
£14,
000
£17
,00
0
£2,0
0,58
8
Cash out
Inventory
(Stock)
Stock purchases £8,00
0
£8,0
00
£8,0
00
£10,
000
£12,
000
£12,
000
£10,
000
£10,
000
£11,
000
£9,0
00
£15,
000
£12
,00
£1,2
5,00

0 0
Other Cost of
Goods
£2,0
00
£2,0
00
Total Cost of
Goods
£8,00
0
£10,
000
£8,0
00
£10,
000
£12,
000
£12,
000
£10,
000
£10,
000
£11,
000
£9,0
00
£15,
000
£12
,00
0
£1,2
7,00
0
General &
Administrative
Bank charges £17 £17 £17 £17 £20 £18 £20 £20 £18 £20 £18 £18
£22
0
Accounting/
Legal/
Consultant fees
£46
2
£46
2
Office Supplies £22 £22 £22 £22 £22 £22 £27 £22 £22 £22 £22 £28
£27
5
License fees £1,20
0
£1,2
00
Business
insurance
£3,00
0
£3,0
00
Total General
&
Administrative
£4,23
9 £39 £39 £39 £42 £40 £47 £50
4 £40 £42 £40 £46 £5,1
57
Marketing &
Promotional
Advertising £275
£27
5
£27
5
£27
5
£1,1
00
Promotion -
General
£30
0
£30
0
Promotion -
Other
£25
0
£25
0
Total
Marketing &
Promotional
£275 £0 £0 £27
5 £0 £30
0
£27
5 £0 £0 £27
5 £0 £25
0
£1,6
50
Operating
Expenses
Newspapers &
magazines £30 £30 £30 £30 £30 £30 £30 £30 £30 £30 £30 £30
£36
0
Parking/Taxis/
Tolls £50 £50 £50 £50 £50 £50 £50 £50 £50 £50 £50 £50
£60
0
Accommodation £20 £20 £20 £20 £20 £20 £20 £20 £20 £20 £20 £20
£24
0
Laundry/dry
cleaning £40 £40 £40 £40 £40 £40 £40 £40 £40 £40 £40 £40
£48
0
Cleaning &
cleaning
products £55 £55 £55 £55 £55 £55 £55 £55 £55 £55 £55 £55
£66
0
Sundry supplies £70 £70 £70 £70 £70 £70 £70 £70 £70 £70 £70 £70
£84
0
Equipment hire £100
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£1,2
00
Total
Operating
Expenses
£365 £36
5
£36
5
£36
5
£36
5
£36
5
£36
5
£36
5
£36
5
£36
5
£36
5
£36
5
£4,3
80
Motor Vehicle
Expenses
Fuel £50
0
£35
8
£27
5
£30
2
£33
0
£34
7
£27
5
£19
8
£20
0
£2,7
85
Vehicle service £35 £35

costs 0 0
Tyres & other
replacement
costs
£10
0
£10
0
Insurance £30
0
£30
0
Registrations £15
0
£15
0
Total Motor
Vehicle
Expenses
£0 £45
0 £0 £50
0
£35
8
£27
5
£30
2
£33
0
£34
7
£27
5
£19
8
£65
0
£3,6
85
Website
Expenses
Domain name
registration £500
£50
0
Hosting
expenses
£11
0
£11
0
Total Website
Expenses £500 £11
0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £61
0
Employment
Expenses
Salaries/Wages £1,23
0
£1,2
30
£1,2
30
£1,2
30
£1,2
30
£1,2
30
£1,2
30
£1,2
30
£1,2
30
£1,2
30
£1,2
30
£1,
230
£14,
760
PAYE £260
£26
0
£26
0
£26
0
£26
0
£26
0
£26
0
£26
0
£26
0
£26
0
£26
0
£26
0
£3,1
20
Superannuation £135
£13
5
£13
5
£13
5
£13
5
£13
5
£13
5
£13
5
£13
5
£13
5
£13
5
£13
5
£1,6
20
Recruitment
costs £0
Total Perm.
Employ Exp
£1,62
5
£1,6
25
£1,6
25
£1,6
25
£1,6
25
£1,6
25
£1,6
25
£1,6
25
£1,6
25
£1,6
25
£1,6
25
£1,
625
£19,
500
Occupancy
Costs
Electricity/Gas £13
0
£13
0
£16
0
£42
0
Telephones £30 £54 £64 £43 £36 £43 £75 £26 £44 £71 £33 £30
£54
9
Property
Insurance £305
£30
5
Repair &
maintenance £70 £70 £70 £70 £70 £70 £70 £70 £70 £70 £70 £70
£84
0
Waste removal £85 £85 £85 £85 £85 £85 £85 £85 £85 £85 £85 £85
£1,0
20
Water £100
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£10
0
£1,2
00
Total
Occupancy
Costs
£590 £30
9
£31
9
£42
8
£29
1
£29
8
£33
0
£41
1
£29
9
£32
6
£28
8
£44
5
£4,3
34
Other Expenses
Bank Interest £2,
000
£2,0
00
Total Other
Expenses £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £2,
000
£2,0
00
Other Cash
Outflows
Purchase of £20, £20,

assets 000 000
Total Other
Cash Outflows £0 £20,
000 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £20,
000
Total monthly
cash out
£15,5
94
£32,
898
£10,
348
£13,
232
£14,
681
£14,
903
£12,
944
£13,
235
£13,
676
£11,
908
£17,
516
£17
,38
1
£1,8
8,31
6
Net difference
-
£5,09
4
£85
2
£5,6
52
£3,8
68
£6,3
19
-
£2,3
57
£27
3
£24
0
£1,3
24
£5,0
92
-
£3,5
16
-
£38
1
£12,
272
Cash balance at
the end of each
month
£14,9
06
£15,
758
£21,
410
£25,
278
£31,
597
£29,
240
£29,
513
£29,
753
£31,
077
£36,
169
£32,
653
£32
,27
2
£12,
272
Application of break-even point
The BEP analysis can be applied which will help in determining the amount of sales it
should incur for incurring the situation of no loss (Kampf, Majerčák and Švagr, 2016). It is very
important for the new business to determine how much revenue it required to met its fixed
cost expenses. The BEP analysis of Apple Plc is down below.
Particulars Amount
Sales 274515
Total Variable Cost* 169559
Contribution 104956
Fixed Cost* 47545
Profit 57411
PV Ratio 38.2%
BREAK EVEN POINT
Sales 124463
(fixed cost/ PV ratio)
* Cost of goods sold is the variable cost and all other cost are the fixed cost.
Interpretation of the key financial statements
Ratio analysis: Apple plc
(All values USD
Millions) 2020 2019 2018 2017
Liquidity ratio
Current assets 143713 162819 131339 128645
Current liability 105392 105718 116866 100814
Inventory 4061 4106 3956 4855
Quick Assets 139652 158713 127383 123790

Current ratio
Current assets /
current liabilities 1.36 1.54 1.12 1.28
Quick Ratio
(Current Assets -
Inventory) / Current
Liabilities 1.33 1.50 1.09 1.23
Profitability ratio
Employed Capital 218496 232798 248859 274505
Net operating profit 66288 63242 71042 60028
Return on capital
employed
Net operating
profit/Employed
Capital 30.34% 27.17% 28.55% 21.87%
Cost of Sales 169559 162264 163826 141702
Sales 274515 259968 265809 228572
Gross Margin
Total Sales –
COGS/Total Sales 38.23% 37.58% 38.37% 38.01%
Operating profit 66288 63242 71042 60028
Sales 274515 259968 265809 228572
Net profit ratio
Operating Income/
Net Sales 24.15% 24.33% 26.73% 26.26%
Efficiency Ratios
Inventory 4061 4106 3956 4855
Net Assets 323888 338516 365725 375319
Cost of Sales 169559 162264 163826 141702
Sales 274515 259968 265809 228572
Asset turnover ratio Sales / Net assets 0.85 0.77 0.73 0.61
Inventory turnover
ratio Sales / Inventory 41.75 39.52 41.41 29.19

Solvency ratios
Total assets 323888 338516 365725 375319
Total Equity 65339 90488 107147 134047
Equity asset ratio
Total Shareholders'
Equity / Total Assets 20.17% 26.73% 29.30% 35.72%
Interpretation:
Liquidity ratio: The current ratio of the company very good which highlights that the
organised has managed its current assets and liabilities effectively. Along with that, the
company has not blocked its amount in its stock which is good.
Profitability ratios: The ROCE of the company is shown an upward trend which means that
the from 21.87% to 30.34% in 2020 which makes it attractive for the investors in making an
investment into it (Cioca, 2020). The GP margin and the NP margin of Apple plc has also
remained consistent which is mainly because of no such variation in the COS, and other
expenses. This results into generating steady income for the company.
Efficiency ratios: The asset turnover ratio of Apple plc is very less which depicts that the
organization is not appropriately making use of its assets in terms of generating higher sales.
Also, the inventory turnover ratio is equal to 0.64 times which means that the company is
finding it difficult to sell its stock quickly.
Solvency ratios: The equity asset ratio of the organization has declined to 20.17% in
comparison to 35.72% (Abdulshakour, 2020). This means that the company has effectively
managed its funds as a result of which the risk of financial debt is reduced. This makes the
financial position of the company sound.
Implication of key legislation and regulations on small businesses
Regulation and law related to employment, employee health and safety and data
protection have impact on small ventures in positive manner when companies follow it in
ethical and systematic manner. For example, when small organizations while operating their
businesses at varied levels providing fair employment or growth chances to all staff members
they can sustain for long period of time. It can evaluate that by following employment related
rules and policies small ventures can gain attention of skilled applicants who are able to drive
sales rather than before and make firms able to reach at international market in effective

manner. There are several types of regulations and legislations accessible in the world of
business that small or other kinds of businesses can use. For examples, Health and social
Care Act 2008, provides clear guidelines to companies through which they can keep accurate
records and key documentation about person needing services that is really very essential.
Another act that firms can consider and use is Employment rights Act 1996, which is one of
the most inclusive part of employment law, covering a different of topics such as unfair
dismissal, employment contracts, redundancy and family leave. According to this law
company’s must provide all the rights of their workers.
CONCLUSION
It can be summed up from the above that the for a start up or any new social
enterprise it is very crucial for analysing its cost and revenue in advance so that strategy can
be based on it. Along with that certain regulations to be incorporated by the
businesses.Financial statements and the BEP analysis provide an immense information about
the organization useful in accomplishing success.

REFERENCES
Books and Journals
Abdulshakour, S., 2020. Impact of financial statements for financial decision-making. Open
Science Journal. 5(2).
Cioca, I.C., 2020. The Importance Of Financial Statements In The Decision-Making
Process. Annales Universitatis Apulensis Series Oeconomica. 1(22). pp.73-83.
Kampf, R., Majerčák, P. and Švagr, P., 2016. Application of break-even point analysis. NAŠE
MORE: znanstveno-stručničasopis za more ipomorstvo. 63(3 Special Issue). pp.126-
128.