Bakin Group (BG) is a limited company. It has 3 holiday parks that offer families holiday accommodation and activities. BG aims to look after its customers' needs 24 hours a day. Customers pay for the holidays when they arrive at the park. Each park has 3 managers and 40 part-time employees. BG uses a wide range of social media networks for promotion. The Finance Director is worried about BG's cash flow position. He cannot decide if an overdraft is the best way for BG to solve its cash flow problem. Table 1: Cash flow forecast for period January - March 2019 ($000) January February March Cash in 120 80 70 Cash out: Interest 10 10 10 Wages and other costs 100 90 90 Total cash outflow 110 100 100 Net cash flow X (20) (30) Opening balance (40) (30) (50) Closing balance (30) (50) Y

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [2] Clear knowledge: business which has a separate legal identity/status to its owners
2. [2] OR a business whose owners are legally responsible for its debts only to the extent of the amount of capital they invested.
3. [1] Some knowledge: e.g. able to sell shares or owners have limited liability
4. [1] X 10 or 10000
5. [1] Y (80) or (80000)
6. [1] More flexible OR able to extend hours OR help meet demand during busy periods [k]
7. [1] so able to offer 24-hour service [app]
8. [1] When not working no need to pay wages OR only paid for hours worked [k]
9. [1] which can help when worried about cash flow [app]
10. [1] Can add more skills OR experience OR ideas to business [k]
11. [1] so able to offer extra activities [app]
12. [1] Help keep OR retain experienced workers [k]
13. [1] Help attract workers who do not want to work full time OR help attract workers who have other commitments [k]
14. [1] Cover wide area OR seen by many people [k]
15. [1] as may be used by many families [app]
16. [1] leading to additional revenue [an]
17. [1] Low cost method of advertising [k]
18. [1] so fewer cash outflows [an]
19. [1] so less need for overdraft [app]
20. [1] Easy to update OR quick to update [k]
21. [1] about its holidays [app]
22. [1] so can spend time on other tasks [an]
23. [1] Way to build relationship OR communicate with customers [k]
24. [1] Can target specific groups [k]
25. [1] could encourage brand loyalty [an]
26. [1] No internet access OR not everyone uses social media OR message lost among many messages on social media [k]
27. [1] which results in less revenue [an]
28. [1] Lack of control OR comments can be altered OR hacked [k]
29. [1] could lead to a bad reputation [an]
30. [1] for its parks [app]
31. [1] Takes time to continually post OR monitor messages [k]
32. [1] which may be difficult for the part-time employees to do [app]
33. [1] Immediately available OR relatively easy to arrange [k]
34. [1] so able to cover its outflows [an]
35. [1] Repayable on demand OR within twelve months [k]
36. [1] Have to pay interest [k]
37. [1] which will increase outflows [an]
38. [1] Ask customers to pay earlier [k]
39. [1] would allow business to receive cash inflow sooner [an]
40. [1] before they reach the holiday park [app]
41. [1] but may see a fall in demand which could lead to a greater fall in cash inflow [an]
42. [1] Ask suppliers for more time to pay [k]
43. [1] which could delay cash outflows [an]
44. [1] and could lose discounts offered for prompt payments which could increase outflows [an]
45. [1] Increase number of customers [k]
46. [1] could increase cash inflows [an]
47. [1] but cost of advertising could increase outflows in short term [an]