Business Studies · May / June 2019 · Paper 11 · Question 3

BVC makes a range of paints. It exports 60% of its products. The Managing Director has been looking at BVC’s cash-flow forecast shown in Table 2. He said: ‘Success is not just about our return on capital employed.’ The Managing Director is worried about the introduction of new legal controls to protect the environment. This will mean BVC will have to reduce the number of chemicals that are used to make paint. He thinks these new legal controls will be bad for business. Table 2: Extract of cash flow forecast for the period July–September 2019 ($000) July August September Cash inflow 600 560 620 Cash outflow 560 540 580 Net cash flow 40 20 Y Opening balance X 60 80 Closing balance 60 80 120

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