Business Studies · May / June 2018 · Paper 12 · Question 2

JSF is a business in the private sector. It has 50 production workers who operate machines. JSF makes a range of household products including towels and bed sheets. Most of the products are sold to retail businesses that take two months to pay JSF. The business is given two weeks’ credit to pay its suppliers. The Finance manager has just prepared a cash flow forecast. He said: ‘Cash outflows are too high. I have already reduced the budget for market research to zero. Training costs are $1000 per month and cannot be reduced as training is important.’ The Finance manager is thinking of other ways to improve cash flow. Table 1: Cash flow forecast for JSF for the period July–September 2017 ($000) July August September Cash inflows 120 100 90 Cash outflows 150 120 120 Net cash flow X (20) (30) Opening balance 60 30 10 Closing balance 30 10 Y

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