Will HLW’s new membership plan and fee structure improve its ability to plan its cash receipts?

Required:

Your consulting firm has been hired to help HLW to evaluate its new fee structure. Write a letter to the club’s managing director dealing with the following issues:

1. Will HLW’s new membership plan and fee structure improve its ability to plan its cash receipts? Explain your answer.

2. Estimate the effect on sales revenue resulting from the planned change in fee structure for the next financial year, which starts 1 October and ends on 30 September. State any assumptions that you need to make.

3. Hawthorn Leisure Works should evaluate the new membership plan and fee structure completely before it decides to adopt or reject it.

(a) Identify the key factors that HLW should consider in its evaluation.

(b) Explain what type of financial analyses HLW should prepare in order to make a complete evaluation.

4. Explain how HLW’s cash management practices may differ from the present if the new membership plan and fee structure is adopted.