Operational – lack of fabric
Occasionally, BTS is unable to sell a specific chair or sofa because the customer’s choice of fabric is unavailable. Lack of fabric is caused primarily by human error at BTS- the procurement manager forgets to re-order fabric. While lack of fabric on an occasional basis is not threatening for BTS, an increase in errors would mean loss of more orders which will start to affect sales significantly.
To mitigate this threat, BTS should either implement a computerized re-ordering system or possibly try and ensure that the procurement manager is trained in memory techniques or implements some other system to identify low fabric stock levels.
P2 Answers:
Question 1 Group Cash Flows
(a) Louis Group Cash flow statement for the year ended 30 November 2008 Cash flows from operating activities $m $m Net profit before tax 2,385
Adjustments to operating activities for:
Depreciation 65
Investment income (20)
Loss on sale on property, plant and equipment 45
Interest expense 40
Associated company (16)
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2,499
Decrease in trade receivables 300
Increase in inventory (400)
Decrease in trade payables (500)
Increase in insurance claims provision 100
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Cash generated from operations 1,999
Interest paid (working 2) (196)
Income taxes paid (1,500)
Payment for pollution (80)
Net cash from operating activities 223
