This resource is based on a fictional business, PotArts Ltd. PotArts buy ceramic plant pots from a supplier in Spain and decorate the pots selling the finished products to garden centres, individual buyers and craft sellers. The key competitive advantage the company has is in the individuality of the designs on the pots. Because they are hand painted, every pot can be different and, apart from the designs being attractive, this individuality seems to be a crucial unique selling point.

You will be given some details about the costs and revenue position of PotArts Ltd. The aim of the activity is to try to get the business to survive through a year's trading. You will be given an initial cash flow forecast based on known factors at present. Having established the forecast, you will have to make certain business decisions to ensure that the business is able to continue trading despite fluctuating cash flow scenarios.

Learning Objectives

As a result of following through this activity you should be in a position to understand the following:

• The distinction between a 'stock' and a 'flow' in terms of cash flow
• The difference between 'cash flow' and 'profit and loss'
• The difference between cash flow 'forecasts' and 'actual' cash flow
• The distinction between short term and long term solutions to cash flow problems
• The impact of external factors on cash flow
• The internal factors firms can use to influence their cash flow
• Key arithmetic and mathematical concepts used to estimate aspects of cash flow

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