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Analysis

In: Business and Management

Submitted By melroyr1995
Words 452
Pages 2
Our analysis is based on a UK based leisure complex. This part covers the analysis of the company’s most important segments i.e. cash flow statement and the income statement.
CASH FLOW Analysis
In the first month there is a negative cash balance because more cash is going out of the business because of cash spent on purchasing fixed assets. The cash balance remains negative till August. This is because the receipts have been constantly low due to less number of members and so the revenue received from membership fees and other incomes was less than the payments. After August the cash balance is positive and is increasing, as the number of members has increased and as a result the revenue from membership fees and other incomes have increased. At the end of the year, the cash balance is negative which not a good sign for the leisure complex as there is less cash in the bank to maintain solvency. The business needs to obtain funds through sources in order to fill in the cash shortages.
Income Statement analysis
There is a loss in the first four months because there is less number of members and as a result there is less revenue from membership fees and other incomes. The firm starts earning profit from the fifth month which is considerably increasing till the end of the year. This is because more members are joining the club each month, thus the revenue from membership fees and other incomes have increased. Towards the end of the year, the firm is earning a profit of £276341.23 which shows that the firm is going well. Conclusion
As we analyze and read through the critical circumstances of the leisure complex, clearly we see there is a scope of investing in the club. Though, it is suffering from cash shortages, it’s still managing to warn profits. Therefore we conclude that investing in...

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