CASE STUDY 3—Cash Budget Template Pape Ndiaye SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS Credit Sales May June April 65,800 May 26,850 62,650 June 22,500 Total Cash Collections 92,650 85,150 SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY Inventory purchases May June April 117,000 May 54,000 81,000 June 25,200 Total Payments for Inventory Purchases 171,000 106,200 LBJ Company Cash Budget For the Two Months of May and June May June Cash balance $20,000 $20,000 Add: Receipts Collections from customers 92,650 85,150 Sale of plant assets 33,000 Sale of new common stock 50,000 Cash sales 75,000 57,000 Total receipts 200,650 192,150 Total Available Cash 220,650 212,150 Less: Disbursements 220,650 212,150 Purchases of inventory 171,000 106,200 Operating expenses 15,000 15,000 Selling and administrative expenses 10,150 10,150 Equipment purchase 35,000 Dividends 20,000 Total disbursements 231,150 151,350 Excess (deficiency of available cash over disbursements) (10,500) 60,800 Financing Borrowings 30,500 Repayments (31,008.33) Ending cash balance $20,000 29, Please answer the three qualitative questions on the next tab called Qualitative Questions. 1) What are the three sections of a cash budget, and what is included in each section? Cash budget is the budget for expected cash inflows and outflows during the specific period of time. Cash budget consists of four sections: receipts, disbursements, cash surplus or deficit, and financing section. The receipts section lists the beginning cash balance, cash collections from customers, and other receipts.
A pro forma cash receipt is a document narrating incoming payments from debtors or receivables and is issued by the business or creditor (Cash Receipts Function, 2011). Function of Cash Receipts Cash receipts give a quick snapshot of particular debtors and respective repayments, thus, helping the business to recognize the source of cash inflows with respect to receivables within the accounted date range (LexisNexis, 2013). I 2. Company’s Cheque to Supplier Next you are to prepare a company cheque to pay a supplier called Shakers Ltd the amount of an invoice that has a gross total of £3,250.00. You are paying the invoice within the credit terms and are entitled to a cash discount of 2%.
Hampton Machine Tool Company 9-280-103 Rev. 12/3/91 SUGGESTED ANSWERS Rocky Higgins April 2001 a)Prepare a sources and uses of cash statement for Hampton for the period November 30 – August 31, 1979. Sources and Uses of Cash November 30, 1978 – August 31, 1979 SOURCES Increase in bank debt $1,000 Increase in retained earnings 883 Decrease in cash 961 Increase in customer advances 726 Increase in accounts payable 600 Decrease in accounts receivable 561 Increase in taxes payable 329 Decrease in net fixed assets 92 Decrease in prepaid expenses 20 TOTAL SOURCES OF CASH $5,172 USES Stock repurchase $3,000 Increase in inventories 2,163 Decrease in accruals 9 TOTAL USES OF CASH $5,172 b)Reflecting on this sources and uses statement, why do you think this profitable company cannot repay its loan on time? What developments between November and August have contributed to this situation? Judging from the sources and uses statement it appears that the sharp increase in inventories is responsible for the company’s inability to repay its loan.
Cost and Revenue A manufacturer sells a product at $8.35 per unit, selling all produced. The fixed cost is $2116 and the variable cost is $7.20 per unit. At what level of production will a) there be a profit of $4600? b) there be a loss of $1150? c) the break even point occur?
What would be the impact on monthly sales cost, and income? Regular Selling Price Impact: Price $4,350 Quantity $3,000 Revenue $13,050,000 Variable Manufacturing Costs ($5,385,000) Variable Marketing Costs ($825,000) Contribution Margin $6,840,000 *Fixed Manufacturing Costs ($1,980,000) *Fixed Marketing Costs ($2,310,000) Income $2,550,000 Using the regular selling price Income = Revenues – Total costs = $13,050,000 - $10,500,000 = $2,550,000 * Continue to the next page New Selling Price Impact: Price $3,850 Quantity $3,500 Revenue $13,475,000 Variable Manufacturing Costs ($6,282,500) Variable Marketing Costs ($962,500) Contribution Margin $6,230,000 Fixed Manufacturing Costs ($1,980,000) Fixed Marketing Costs ($2,310,000) Income $1,940,000 2) After price reduction, income = $13,475,000 - $11,535,000 =
CASE STUDY 3 - Cash Budget Template SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS: Credit Sales August September July 12.000 August 14.400 9.600 September 10.800 Total Cash Collections 26.400 20.400 SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY Inventory purchases August September July 32.500 August 22.500 22.500 September 10.500 Total Payments for Inventory Purchases 55.000 33.000 Oxford Company Cash Budget For the Two Months of August and September August September Cash balance $10.000 $10.000 Add: Receipts Collections from customers 26.400 20.400 Sale of plant assets 12.350 Sale of new common stock 16.850 Cash sales 51.000 39.000 Total receipts 89.750 76.250 Total Available Cash 99.750 86.250 Less: Disbursements Purchases of inventory 55.000 33.000 Operating expenses 6.750 6.750 Selling and administrative expenses 12.500 12.500 Dividends 19.000 Equipment purchase 6.000 Total disbursements 93.250 58.250 Excess (deficiency of available cash over disbursements) 6.500 28.000 Financing Borrowings 3.500 Repayments (3.920) Ending cash balance $10.000 24.080 Answer to the questions What are the three sections of a Cash Budget, and what is included in each section? The Cash receipts section includes expected receipts from the company’s principal source(s) of cash, such as cash sales and collections from customers on credit sales. This section also shows anticipated receipts of interest and dividends, and proceeds from planned sales of investments, plant assets, and the company’s capital stock. The Cash disbursements section shows expected payments for inventory, labor, overhead, and selling and
What’s the purpose of a profit and loss statement? A profit and loss statement serves as an essential document in financial reporting. The profit and loss statement allows an investor or a manager of the business to evaluate and analyse thing such as their profit margin, gross income, costs of goods, number of sales etc… Interpretation of Whitbread’s profit and loss statement data Turnover Turnover is the amount of money which is taken in by a business over a particular period of time. As shown on Whitbread’s profit and loss statement from 2001/2002 they had a turnover of £2014.3 million but from 2002/2003 they only had a turnover of £1794.1 million this is a decrease of £202.2 million in one year and this is a serious reduction in sales. The decrease in turnover could be due to the year just being quiet or it could be due to the other new businesses under the umbrella
Case Solutions Corporate Finance Ross, Westerfield, and Jaffe 9th edition CHAPTER 2 CASH FLOWS AT WARF COMPUTERS The operating cash flow for the company is: (NOTE: All numbers are in thousands of dollars) OCF = EBIT + Depreciation – Current taxes OCF = $1,332 + 159 – 386 OCF = $1,105 To calculate the cash flow from assets, we need to find the capital spending and change in net working capital. The capital spending for the year was: | |Capital spending | | | |Ending net fixed assets |$2,280 | | |– Beginning net fixed assets |1,792 | | |+ Depreciation | 159 | | | Net capital spending |$ 647 | And the change in net working capital was: | |Change in net working capital | | |Ending NWC |$728 | | |– Beginning NWC | 586 | | | Change in NWC |$142 | So, the cash flow from assets was: | |Cash flow from assets | | | |Operating cash flow |$1,105 | | |– Net capital spending |647 | | |– Change in NWC | 142 | | | Cash flow from assets |$316 | The cash flow to creditors was: | |Cash flow to creditors | | | |Interest paid | $95 | | |– Net New Borrowing | 20 | | | Cash flow to Creditors | $75... Total cash flow from operations $937 Investing Activities Acquisition of fixed assets -$786 Sale of fixes Assets $139 Total cash from investing activities -$647 Financing Activities Retirement of long term debt -$98 Proceeds from long term debt sales $118 Change in notes payable $5 Dividends -$212 Repurchase of stock -$40 Proceeds from new stock issue $11 Total cash from financing activities -$216 Change in cash $39 Description of Cash Flow for Warf Computers, Inc. Overall company cash flows is positive. The company has positive outcome in regards to its earnings. The company has the monetary means to invest in the future, and was able to return money to its shareholders and pay its creditors/lenders.
Set out the following balances in a published balance sheet, including all the titles and headings required. The company draws up accounts for the year ended 31 December 2013 Share capital 25,200 Retained profits 25,350 Cash 900 Trade creditors 4,800 Plant, property and equipment cost 128,850 Share premium 18,000 Stock 5,400 Trade debtors 2,400 Accruals for expenses 1,800 Prepayments for expenses 3,900 Bad debt provision 300 Loans over one year 6,000 Plant, property and equipment accumulated depreciation 60,000 QUESTION B1 - Credi Ltd is a company with a financial year-end at 30 September 2014 The company had two identical fixed assets at 30 September 2014. Prior to recording the depreciation charge for the year and the effects of fixed asset disposal, each had a cost of £250,000 and each an accumulated depreciation of £160,000. Each had a residual value of £10,000 and a six year life originally. On 30 September 2014, one of the fixed assets was sold for £75,000 in cash.
The manager cited the resulting high depreciation charges as the justification for the price boost. He asked the president of the company to instruct Division P to buy from S at the $220 price. He supplied the following information: P's annual purchases of component 2,000 units S's unit and batch-related costs per unit $190 S's capacity related costs per unit $20 S's required return on investment $10 Suppose there are no alternative uses of the S facilities. Required 1) Will the company as a whole benefit if P buys from the outside suppliers for $200 per unit? 2) Suppose the selling price of outsiders drops another $15 to $185.