Skyline Limited has been trading for the past five years. They have recently realized that they are experiencing frequent cash flow issues.
finance
Description
THE SKYLINE LIMITED CASE
Skyline Limited has been trading for the past five years. They have recently realized that they are experiencing frequent cash flow issues. Their financial accountant has suggested and has began the process of tracking the inflows and outflows of the company’s cash. The following information on revenue and costs were made available to you:
Additional notes:
i. The cash balance on January 01st 2020 was $26 250;
ii. 20% of sales is usually attributable to cash sales while the remainder is settled: .
a. One month after sales: 60%;
b. Two months after sales: 20%.
iii. 2% of sales is allocated to Sales Expenses and is paid in the month of sale;
iv. 50% of cost of purchases is paid in the month of purchase and the next 50% in the following month;
v. 3% of purchases is allocated to Purchases Expenses and is paid in the following month
after purchase;
