Case Flow Forecast- Case Study for Business Management

 1 Good Books Limited ( GBL)

Good Books Limited (GBL), a well-known publisher specializing in IB Diploma and Cambridge IGCSE books and examination resources, is planning to expand its operations. To leverage its strong reputation, GBL's management aims to publish non-academic books targeted at university students and research scholars.

Although GBL has $10,000 in internal funds available, the management has decided to partially finance the new venture through a bank loan. Roy, the finance manager, has approached a bank to secure the loan. The bank manager has requested Roy to prepare a cash flow forecast for three months, starting from April 2025.

The following revenue and expense projections have been made for the first three months:

·       Internal Funds: $10,000 (opening balance).

·       Bank Loan: $20,000 (at the start of operations).

·       Startup Expenses: $12,000 (April 2025).

·       Monthly Rent: $2,200.

·       Employees’ Salaries: $6,000 per month.

·       Loan Repayment: $3,000 per month starting from June.

·       Promotional Expenses: $1,300 (one-time expense in April).

·      Estimated Monthly Revenue: $12,000 (50% of sales on one-month credit). Sales revenue will increase by $1200 per month starting in May.

 

Questions:

(a)	Outline two differences between cash and profit	[2 marks]
(b)	Prepare a cash flow forecast for GBL for the first 3 months of operation	[6 marks]
( c)	Identify and explain two benefits of cash flow forecast as a planning tool for Good Books Limited	[4 marks]

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