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In the Cash flow attached, there many problems. If the company offer 30 day credit however, their customers are slow to pay.

· If customers are slow always like this then the company will be in problems.

· From the cash flow close, it looks like the company are paying their suppliers too quickly.

· One more problem I have identified in my cash flow forecast is that there are too much drawings going on. Firstly Mrs Verdi is drawing £4000 for herself every month. This is too much as it adds up to £48000 at the end of the financial year. The main problem is that the business is not doing very well and consequently any cash available needs to be used wisely in order to avoid huge debts.

· The company owner paid £1000 on capital expenditure at the very first month. There were pretty high and eventually lead to a huge shortfall at the end of the financial year, so this is the worse and serious problems for his firm.

· Another problem within the company is that there is too much stock being held by the company. The business is not selling quickly enough to generate enough cash.

· Also Mrs Veridi's capital was too small at the beginning of the year.

· Bad debt: there will be a bad debt of £47000 due to the 30 day credit at the end of the financial year. This will affect the company badly as it may end up being declared as bad debts.

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