JSF is a business in the private sector. It has 50 production workers who operate machines. JSF makes a range of household products including towels and bed sheets. Most of the products are sold to retail businesses that take two months to pay JSF. The business is given two weeks' credit to pay its suppliers. The Finance manager has just prepared a cash flow forecast. He said: 'Cash outflows are too high. I have already reduced the budget for market research to zero. Training costs are 1000 per month and cannot be reduced as training is important.' The Finance manager is thinking of other ways to improve cash flow. Table 1: Cash flow forecast for JSF for the period July-September 2017 (000) July August September Cash inflows 120 100 90 Cash outflows 150 120 120 Net cash flow X (20) (30) Opening balance 60 30 10 Closing balance 30 10 Y

Mark scheme

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

1. [2] an estimate of cash inflows and outflows of a business, (usually on a month by month basis) OR Estimate of timings and amount of cash inflows and outflows over a given period of time or over months to come
2. [1] shows cash / money inflows and outflows
3. [1] X = (30) or (30 000)
4. [1] Y = (20) or (20 000)
5. [1] Greater awareness of (current) consumer needs / preferences (only once) [k] for towels and sheets [app]
6. [1] Help identify gaps in the market OR future trends [k]
7. [1] Find out about competitors OR size of the market [k] as in private sector [app]
8. [1] Helps set price [k] which could help increase cash inflow above $9000 [app]
9. [1] Produce the correct amount of products [k] that could help reduce cash outflows which are too high [app]
10. [1] Reduces risks OR products launched with more confidence [k]
11. [1] Help decide how best to promote its products [k] to retailers [app]
12. [1] Help gain competitive advantage [k]
13. [1] Increased motivation [k] so could lead to increased efficiency OR output OR faster [an] when making towels [app]
14. [1] Fewer customer complaints [k] from retailers [app] increasing customer loyalty OR sales OR revenue [an]
15. [1] Fewer mistakes OR less wastage OR better/maintain quality [k] of 50 production workers [app] lower costs of rework [an]
16. [1] Fewer accidents OR ensure safe working conditions [k] when operating machines [app]
17. [1] More skilled OR flexible employees OR workers know what to do [k] so able to cover absences of others [an]
18. [1] Less supervision needed [k]
19. [1] Help reduce number of employees leaving OR encourage employee loyalty OR retention [k] lowering recruitment costs [an]
20. [1] Help attract employees [k]
21. [1] Able to train others [k] so reducing training costs [an] below $1000 per month [app]
22. [1] Find cheaper supplier [k] as this would reduce cash outflow [an] but cheaper could mean lower quality leading to lower cash inflows/ sales [an]
23. [1] Increase number of customers [k] which could increase cash inflows [an]
24. [1] Arrange a short term loan OR overdraft [k] giving them quick access to cash [an] especially at time when cash outflows are high [app]
25. [1] Reduce level of trade receivables (debtors) or ask trade receivables (debtors) to pay quicker [k] than 2 months [app]
26. [1] Delay purchases [k] so keeping cash in the business [an]
27. [1] Reduce level of inventory [k]
28. [1] Sell unwanted non-current assets [k] as workers use machines [app] so releasing cash tied up in the business [an]
29. [1] Ask for more time to pay suppliers [k]