Balancing the books | Features

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