The decision making model that I would put to use would be the rational decision-making model consisting an eight-step series to ensure that I make the best choice for a better outcome (Bauer & Erdogan, 2012). We must ensure that the organization has a set goal, and what it is they want to achieve. Without an organized plan there will be no direction, there will be unawareness and a cause of lack of responsibilities (Walker, 2009, p. 287). With a structured plan, we can provide a much more harmonized approach which can begin a process to help managers plan ahead of time. Now, I would assist my friend by first identifying the problem(s) with the somehow £60,000 profit, and how her cash balance has fallen by £10,000.
So, a few factors could have contributed to the fall of the cash balance. First, the fixed assets could have possibly been purchased causing a reduction of the cash balance with a distribution of the cost charging negatively with profit (Walker, 2009, p. 122). Second, supposedly inventories have elevated and caused decreasing cash, but if unused could not have charged as profit and loss account (Walker, 2009, p. 122). Third, sales could have been credited with profit increasing by sales; however, there would be no result of cash inflow (Walker, 2009, p. 122). Fourth option, a repaid in loan would reduce it, but a payment from the income statement would have provided a clue (Walker, 2009, p. 123). Lastly, specific expenses could have had an advance in pay for the accounting period, but it would’ve been forwarded to compare with the revenue for the anticipated quarter (Walker, 2009, p. 123).
Now I will explain to my friend the positive and negative impact on cash flow and establish decision criteria. Depreciation provisions, the cash spent when unavailable asset is procured, and the writing off a naughty debt would have no brunt on the cash flow, and the issue of regular shares would be positive (Walker, 2009,p. 123).