Paw Cash Flow

MEMO

To: Peter

From: Audit Senior CPA

RE: Paw Cash flow

Base on the projected cash flow, outflows will be greater than inflows for the years 2005 and 2006 but it will start to generate a positive net operating cash flow in year 2007. The company must invest approximately $95,000 each year for expenses such as lab materials, Beth’s living and utility expense. Another contributing factor is the 18% cost, which is allotted for research development and 2% royalties, which amounts to $140,000 in year 2007 and $214,000 in year 2008. Enviro can renegotiate the terms of this cost and cut it in half until the project is generating enough cash to support its operation by its own.

Qualitative Consideration

Looking at the projected cash flow, we can assume that the project is profitable but there are also some considerations that you must consider before agreeing on this project. The positive aspects on this project are that Gordon has experience in this industry and therefore he would be able to help the business to bloom. We also need to look at the technological capabilities of PAW as they have some groundbreaking equipment that may also help with the business

On the other hand, there are also some negative aspects that must be considered such as possible diseases that the livestock may acquire. This uncontrollable factor will definitely must taken into some serious consideration as this is a grave threat to the company’s ability to operate.

MEMO

To: Peter

From: Audit Senior CPA

RE: Paw Cash flow

Base on the projected cash flow, outflows will be greater than inflows for the years 2005 and 2006 but it will start to generate a positive net operating cash flow in

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