Evaluate cash-flow forecasts for planning liquidity, finance and survival while considering uncertain sales, unexpected costs, inaccurate assumptions and changing conditions.
Extract C Darwin Film Society and the Deckchair cinema Darwin Film Society (DFS) is a social enterprise that helps community groups and charitable organisations to show films for fundraising events. It is mainly run by volunteers but does have a small number of salaried employees who oversee the running of the film society throughout the year. In addition to the fundraising events, DFS set up the Deckchair cinema in 1994. The Deckchair cinema shows films outdoors from April until November each year. The atmosphere is very relaxed, with 250 deckchairs for customers to use. The skies are usually cloud-free and the stars make a great backdrop for the screen. DFS has a growing membership of more than 1,000 people. Most of DFS's revenue comes from ticket sales and film society members who pay Aus$75 per year. Membership includes free entry to four screenings at the Deckchair cinema, reduced ticket prices for further screenings and priority access to any DFS event. Most membership fees are paid in April and May and are credit sales. Between December and March, the Deckchair cinema is closed and there are no screenings, charitable or special events. However, all other cash outflows need to be paid during these months. Since 2012, environmental protection legislation in Darwin states that all drinks bottles must be labelled to show that Aus$0.10 will be refunded when the container is returned to an official collection point. As part of its ethical profile, DFS provides recycling bins at the Deckchair cinema, where bottles can be collected for this Container Deposit Scheme (CDS). All money raised supports local charities. In addition, bottled water is no longer sold at the cinema to further reduce waste. Instead, customers are invited to enjoy filtered water free of charge from the sales kiosk.
Extract D Cash flow forecast for Darwin Film Society (DFS) April-July 2021
Extract C Darwin Film Society and the Deckchair cinema Darwin Film Society (DFS) is a social enterprise that helps community groups and charitable organisations to show films for fundraising events. It is mainly run by volunteers but does have a small number of salaried employees who oversee the running of the film society throughout the year. In addition to the fundraising events, DFS set up the Deckchair cinema in 1994. The Deckchair cinema shows films outdoors from April until November each year. The atmosphere is very relaxed, with 250 deckchairs for customers to use. The skies are usually cloud-free and the stars make a great backdrop for the screen. DFS has a growing membership of more than 1,000 people. Most of DFS's revenue comes from ticket sales and film society members who pay Aus$75 per year. Membership includes free entry to four screenings at the Deckchair cinema, reduced ticket prices for further screenings and priority access to any DFS event. Most membership fees are paid in April and May and are credit sales. Between December and March, the Deckchair cinema is closed and there are no screenings, charitable or special events. However, all other cash outflows need to be paid during these months. Since 2012, environmental protection legislation in Darwin states that all drinks bottles must be labelled to show that Aus$0.10 will be refunded when the container is returned to an official collection point. As part of its ethical profile, DFS provides recycling bins at the Deckchair cinema, where bottles can be collected for this Container Deposit Scheme (CDS). All money raised supports local charities. In addition, bottled water is no longer sold at the cinema to further reduce waste. Instead, customers are invited to enjoy filtered water free of charge from the sales kiosk.
Using the data in Extract D, analyse two possible problems for Darwin Film Society (DFS) from its cash flow forecast from April–July 2021. (6)