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| Improving cash flow | ||
| Before | After | |
| Fixed assets (equipment, cars) | 75000 | 75000 |
| Work in progress | 100000 | 33000 |
| Stock | 10000 | 5000 |
| Debtors | 175000 | 182000 |
| Creditors | (125000) | (95000) |
| Hire purchase | 0 | (15000) |
| Bank balance | (25000) | 25000 |
| Directors’ bonuses owed | (25000) | (25000) |
| Net current assets | 110000 | 110000 |
| 185000 | 185000 | |
| Share capital | 10000 | 10000 |
| Profit and loss account | 175000 | 175000 |
| Total | 185000 | 185000 |
| The following assumptions have been made: | ||
| 1 The company has three months’ work in progress | ||
| 2 Debtors take, on average, 60 days to settle | ||
| 3 Bank overdraft is at its maximum of £25 000 | ||
| 4 The company has bought a car for £15 000 cash | ||
| 5 The company only requires half the stock currently held | ||
| 6 Creditors are paid when cash is collected from debtors | ||