Business accounting Essay

M1 disassemble the bullion flow problems a business might experience. For this task I will be write to Alan Hall with an analytic thinking of the problems in his cash flow statement. Dear Mr Hall, I hold up made an analysis of your cash flow statement and am writing to you to inform you about all the problems I establish identified Trends on the Net Cash Flow reliefsThere are m all trends within the cash flow statement such(prenominal) as the constant amplification in advertising rates of clxxv up until September where it increases. It was sweet to increase it more in Christmas, but this shouldve carried on into January as it is a new year and a time to sell off any stock that may have remained. 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 not be able to afford any changes that may lead in an increase in cash outflow. I have identified a problem in thewages the wage s has increased twice In June. Both were increased in June, at one time by 400 in the wages. The additional 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 only rising immensely thusly causing the gag law vestibular sense to be negative despite the continuous rise in sales.The purchases are the main expenditure, which is immense 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 find reasons why so changes can be made. There is a nut sum of 9000 in the calendar month of March, from a vehicle that was purchased. This lump sum causes the March closing quietus to be a negative balance of -2,645 causing the cash flow to have a border overdraft.Negative Closing balancesThe closing balances were decent and posi tive until April where the closing balance became -1,654. The reason for this may be the decrease in sales by 2520 in March, despite there being an extra influx from the bank andsavings of 8000. The reason of there being a negative closing balance must(prenominal) 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 entire 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.