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Transcription of this question: 5.Rizzo FashionsAntonio Rizzo sells fashionable clothes in various retail outlets that focus on teenage fashions.Rizzo Fashions ‘ product range includes eight brands that cater to various teenage market segments.Aware Of the importance Of product branding, Antonio is planning to launch a new product rangecalled “Speranza”Antonio has produced forecasted sales revenue and costs for January to June 2009 if the “Speranza”range is launched. He expects to receive a monthly revenue of S 100000. 60% Of this will be paidin cash with the remaining 40% received one month later. He also expects sales to grow byper month.Electricit billTelephone billAdvertisinOffice rentFinance chargeOpening cash balance forJ anuary 2009S 10 000 er month$45 000 annual charge to be paid in equalinstalments in Febru and A rilS 15 000 er month$30 OOO to be paid in Marchper month$50 oooAntonio is concerned that debtors have been slower in making their payments and this has increasedRizzo Fashions ‘ working capital requirements. He also recognizes the need to raise additionallong-term funds if he is to launch this product range. Therefore, he is considering taking out abank loan, which would be secured against the family home. Alternatively he could issuenew shares. At the moment, all shares are owned by family members.(a)(b)(c)(d)Define the term product branding.Explain why Rizzo Fashions needs working capital.Use the data above to construct a cash flow forecast from January to June 2009.Discuss the advantages and disadvantages Of the alternative forms Of financingthe new product range that Antonio is considering.[2 marks][4 marks][6 marks][8 marks]

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