Explain the key ratios that can be used to analyse the cash flow and balance sheets.

This restaurant is situated by seaside and Sandy bought a small seaside restaurant on 1st April for £650,000 of vihth £150,000 is fixtures and fittings, and the rest is the cost of the building This restaurant is situated by the seaside in the popular beach area in the southern costaline of the country. it wit attract both the locals, hobday makers and tourists. The restaurant wit be open for They wi put an additional 330 days a year £1,000 into the business as an opening cash balance.

They have set the laming annual budget for the first year of trading: it Labour costs 1A Cost 01 sales Other expenses tt Profit reguted is Intel stock (based on cost of sales) worths 1 month of cost of sales paid in first month Cash sales (inducing credit cards) is 90% of the total sales and the rest is debtors, which will be paid in the following month :.t Assume that sales occur evenly in each month.
25% of total sales and paid in the current month. They will be working a lot themselves. 30% of total sales and paid in the current month 35% of total sales and paid in the following month 10% of the total sales, which is £15,000

You are asked to

1) Prepare the cash budget for the fist 6 months of trading. ending 30th September. :‘

2) Calculate the working capital as or the end of 30th September

3) Explain the key ratios that can be used to analyse the cash flow and balance sheets.

4) Comment on the fast so( months’ business performance and other factors to be considered when starting this new business. 3) Comment on the approaches taken by Shety and Sandy in preparing for the annual budget.