1. Company BC wins the bid for an office block building project in January 2021 with the provisional start of construction phase at the beginning of March 2021. You are employed by the company to develop a cash flow forecast from the contractor’s point of view from the beginning of the construction phase (8 months) to the end of defects liability period (4 months).

(a) Explain the significance of the cashflow diagram from the contractor’s perspective. (8 marks)

(b) Using cash flow principles, sketch the likely cashflow diagram for the contractor, only related to this contract, from March 2021 to February 2022 if there is a delayed payment from the contractor to the subcontractor and suppliers. Please explain any assumptions you make to develop the diagram. (12 marks)

(c) Indicate the required working capital and the point in the diagram where your contract becomes self-financing

Answer rating: 100% (QA)

The Cash Flow Statement portrays how a company has spent its cash I... View the full answer