Business Perfomance Assignment Dares Paint Limited Budget Free Essay Example, 2000 words

We can take another analogy from chemical reactions. Profit for a business is like the free energy change associated with a reaction. Like free energy change has to be negative for a chemical reaction to be feasible, similarly, profit is a must for doing a business. Nobody will like to go for a loss-making business; rather everybody will like to go for a profitable business. Therefore, profit is a necessary criterion for carrying out a business. But is it a sufficient criterion. If one can conceive a profit-making business, can he or she necessarily do the business? This will depend on the kind of cash flow he can manage in the business. The cash flow for a business is much like activation energy or kinetic barrier for a chemical reaction. Even if a reaction is feasible by the thermodynamic criteria or free energy considerations it can not take place unless there is a favorable kinetics associated with it. Similarly, a positive business cannot be run unless a healthy cash flow is pa rt and parcel of the business. Which one is more important? We will write a custom essay sample on Business Perfomance Assignment: Dares Paint Limited Budget or any topic specifically for you Only $17.96 $11.86/page Therefore, cash flow is certainly more important than the profit. This is the reason why firms are will even lose on the profit margins by a couple of basis points if it helps in maintaining a healthy cash flow. Calculations for April. Receipts. Cash Sales = 20% of April sales = 0.20*April sales volume (lit)*sales price ( /lit) = 0.20*950*50 = 9500 This is because only 20% of the current month s sales are Cash sales. Credit Sales = 80% of March sales = 0.80*March sales volume (lit)*sales price ( /lit) = 0.80*800*50 = 32000 .