1.

Sonya has been running Bambino Parties for two years. Last year, she made a profit of £8,000 and now wants to increase the number of parties by 20%.

A friend recently started to work for Sonya on a part time basis. She designs backgrounds for parties and these have proved very popular. Her friend has asked if she can become a partner in Bambino Parties. She is willing to invest £3,000 into the business in return for 50% of the profits and will work full time to help expand the business.

When Sonya takes a booking for a party, she asks for a 10% deposit and then receives the rest of the agreed price after the party. Her suppliers, people who provide venues, catering, and birthday cakes, expect to be paid in advance. She is worried about the effect this will have on cash flow.

Sonya has produced a cash flow forecast:

	June £	July £	August £	September £
Total Income	5,000	11,100	9,200	11,600
Total Expenses	8,100	7,100	9,800	7,900
Balance brought forward	(1,300)	(4,400)	(400)	(1,000)
Balance carried forward	(4,400)	(400)	(1,000)	2,700