Jan Feb Mar Apr May JunJul sep . Oct Nov . Dec Total 1,300 | 1,300 1.300 | 1,300

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Jan Feb Mar Apr May JunJul sep . Oct Nov . Dec Total 1,300 | 1,300 1.300 | 1,300. 2.600 2,600 : 3,900| 3900. 2,600 2,600 . 1,300 1,300 26.000 (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000)(1,000) (1,000)(1,000) (1,000) (1,0DD) (12,000) EBITDA Depreciation Expense Interest Expense Pre-Tax Income Income Tax (Provision) Beneft Net Income (500) (500) (500) (500) (500) (500)(500)(500) (500)(500) (500)(500) (6,000) 200) (200) (200) (200) 1,1001,100 2,400 2.400 1,100 1,100 (200) (200) 8,000 70 (2 (130)--52 ,8 (385) (840) (840) (385) (385) 70 7151.560. (130).(130)___ (130). (130) -715. 1560-715 7151 (130)· 000 1,000 1,000 1,000 1,000 1,000 1,000 1,0001,000 1,000 1,000 1,000 12,000 Add Back Depreciation Expense Interest Expense( Licensing Fee (Annual) Insurance (Annual) Real Estate Taxes (Quarterly) 600 (2,500) 500 500 500500500 (2,500) 500 500 500 00 200 200 200 200200 (2,200) 200 200 200200200 500 500 500 500 500 500500500 (5,500)500500500 00 (1.200) 60000 (1.200) 600 600 (1.200)600600 (1,200) 600 Operating Cesh Flow 5,000) Bond Principal Repayment Restaurant Renovations Maintenance Captal Expenditures Dividends (500) (500) (500) (500) (500) (500)(500)(500) (500) (500) (500) (500) (6,000) (750) (750) (750) (750) (750) (750)(750)(750) (750) (750) (70) (750) (9,000) 2,000) (8,000) (2.000) (2,000) (2.000) (Deficit) 1.420 (5380) (3.580) 1420465265710- 13600) (8,735 2.265 380580 (15800) Cumulative Surplus (Deficit) 1.420 (3,960) 7540) (6,120) (5655) (5390) 4680(8.370) (17 105) 14 840) 15.220) (15800)

Explanation / Answer

The months where the cumulative deficit falls below 7 million are february, April, May, June and July.

STEPS TO BE TAKEN TO ENSURE DEFICIT DOES NOT EXCEED 7 MILLION ARE AS FOLLOWS:

1) Ensure Resturant rennovation and maintenance cost incurred aid in generating more sales for that period so that cash flow increases. In the given case every month resturant rennovation and maintenance cost of 500 and 750 are spent while sales increase only for a few months.

2) The firm can also resort to interest expenses that are tax deductible so can save some money from taxes.

3) Can borrow funds for short term for financing working capital needs. Interest on certain borrowed funds are tax deductible under various schemes.

4) Considering this is a resturant business change in menu items as per the occasion and cutting down on items that donot generate adequate sales is desirable.

5) Food prices often fluctuate so prices of food items that can accomodate such changes should be considered to generate cash flow and not deficit.

6) Planning always come handy.Make an estimate of weekly cash flows so one has enough time for arranging funds in case of deficits.

7) Issue shares that pay dividends according to profits and not a fixed dividend irrespective of profits.

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