Question 2 - Part b

In this lesson

1. 0:00 Introduction to Part B: Cash flow evaluation
2. 2:02 Understanding sales forecasts and assumptions
3. 4:36 Supplier payments and inventory calculations
4. 5:07 Lease payments per coffee shop analysis
5. 5:50 Other costs and inflation concerns
6. 6:15 Capital expenditure and equipment replacement
7. 7:23 Loan repayment and interest assumptions
8. 8:27 Missing elements: tax and completeness gaps
9. 9:03 Writing your answer: structuring judgement points
10. 13:11 Supplier payment timing and industry practice
11. 15:04 Lease costs for new locations: realistic assessment
12. 17:17 Marketing spend and capital expenditure gaps
13. 19:37 Loans, interest, and tax: final assessment points

About this lesson

You'll work through a detailed three-year cash flow forecast, identifying unrealistic assumptions and missing elements across sales, supplier payments, lease costs, operating expenses, capital expenditure, financing, and tax. By the end, you'll understand how to challenge forecasts systematically and earn marks for commercial judgment. The video walks you through exhibit two's cash flow line by line, showing you how to spot problems: sales assumptions that ignore new shop ramp-up periods and smaller airport footfall, pricing inflation that exceeds stated rates, supplier payment terms that contradict known conditions, lease costs that appear too low for new locations, and operating costs with no inflation despite three-year forecasts. You'll also learn to identify critical omissions—no tax provisions, no loan repayment or interest on new financing, no ongoing capital replacement, and minimal marketing for existing shops. The marking approach rewards specific points of judgment rather than generic discussion. You need eight distinct observations to earn full marks, but the video shows you'll easily find more than enough. The key is linking each challenge to evidence from the exhibits and explaining why assumptions are unrealistic given the company's context. You'll see how calculations support your judgement—for example, working out lease cost per shop to compare old and new locations—and how commercial acumen (like recognising supplier payment difficulties mentioned earlier) strengthens your analysis. This approach applies directly to cash flow forecasting questions across audit, assurance, and advisory modules, helping you balance scepticism with fairness and earn both technical and professional marks.

Duration: 23m