Overdraft and Cash Flow Position Essay

Submitted By idiotftw
Words: 572
Pages: 3

Dear LA Spares,
Re: Cash flow position for 2014
Hello I'm writing in response about your cash flow position for the financial year of
2014. This is an analysis of your cash flow position over the 12 months including comments of your bank balance and other issues you should think about and problems you may fix. In the first month of 2014 your closing balance was £1325 which compared to others is good. Because you have your bank balance in credit you will not get overdraft charge. In February you made £2175 loss because you bought more expensive stock and purchase than in January. This made an inflow deficit which charges you with overdraft in March of £85 which is 10% of February's closing bank balance of £850.

Starting March your outgoings was more than your income, which is a result of £4720 loss. This means you got overdrawn for another 557£ in the month of April. Increased outgoings like rates or advertising could cause you these problems. Also increased purchases were a result of inefficiency appearience in April, because you made another loss of £1332. Comparing March and April’s expenses, April’s expenses were significantly less with spending £8848 less than in March. Even with decreased spending you would be overdrawn anyway, because was more expensive than income. In May your closing bank balance was £-6902, that means that you got overdrawn again with 10% of it, which is £690.20. In may your income was increased by additional sales, bank loans and capital. Even having all this money this company is unable to make a profit and still makes a loss of £1265.20 which means an another overdrawn in June of £816.72, because closing balance in the June was £-8167. Every overdraft leads to a bigger debt. In June nothing went good for the company, still another loss of £3871.72 and £387.17 overdraft. This loss meant that in July, company will have bank charge of £1203.89 and made another loss of £2198.89. Closing balance end up with £-14237.81 which meant another bank charge of £1423.78 in August. The good thing in August was that you made a smallest loss than in previous months. Cash outflow and Cash inflow was closest to January. The closing balance in August was £-15456.59 which was overdrawn by £1545.65 in September. September was one of the most expensive months - you spent £28585.66 and made another loss of£6660.66.…