EBK FINANCIAL ANALYSIS WITH MICROSOFT E
8th Edition
ISBN: 9781337515528
Author: Mayes
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 3P
a.
Summary Introduction
To calculate: Cash budget for January 2017 to June 2017.
Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.
b.
Summary Introduction
To find: Minimum amount necessary for maintaining desired cash balance.
c.
Summary Introduction
To create: Best-case, base-case and worst-case scenario assuming a 10 % variation in revenue and impact of the same on loan requirement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The Cannon Ball has projected its first quarter sales at $11,200, second quarter sales at $10,900, and third quarter sales at $13,300. The firm's cost of goods sold is equal to 71 percent of the next quarter's sales. The accounts receivable period is 30 days and the accounts payable period is 60 days. At the beginning of the first quarter, the firm has an accounts receivable balance of $2,800 and an accounts payable balance of $6,300. The firm pays $1,500 a month in cash expenses and $200 a month in taxes. At the beginning of the first quarter, the cash balance is $530 and the short-term loan balance is zero. During the first quarter, the firm is planning on spending $2,600 for some new equipment. The firm maintains a minimum cash balance of $20. Assume each month has 30 days. What is the cumulative cash surplus (deficit) at the end of the first quarter, prior to any shortterm borrowing?
GRB Ltd has several product lines with a manager in charge of each product line. The
managers are paid a bonus based on the net income generated by their product line. Rubica
(the CEO of GRB Ltd) was going through the financial reports of the 2nd quarter of 2021 to
analyse the performance of the product lines. For 'Sweets' one of the largest product lines of
GRB Ltd, Rubica noted that while the sales declined from $800,000 in quarter 1 to $600,000
in quarter 2, the product line manager of Sweets received a bonus larger than the 1st quarter.
The manager of Sweets division was eligible for a higher bonus due to an operating profit
increase from $90,000 in the 1st quarter to $120,000 in the 2nd quarter. Rubica wondered how
the product line manager was entitled to a higher bonus with a decline in sales. Rubica also
wants to know how net income increased with a decline in sales.
Rubica found the following data from the financial reports of 'Sweets':
Particulars
Quarter 2
Quarter 1
Units…
Limitless Styles has a 45 day accounts payable period. The firm has expected sales of $900, $1,200, $1,900, and $2,600, respectively, by quarter for the next calendar year. The cost of goods sold for a quarter is equal to 70% of the next quarter sales. The firm has a beginning payables balance of $600 as of quarter one. What is the amount of the projected cash disbursements for accounts payable for Quarter 3 of the next year? Assume that a year has 360 days.
A)$1,195
B)$1,085
C)$1,575
Chapter 4 Solutions
EBK FINANCIAL ANALYSIS WITH MICROSOFT E
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- A company is launching a new sales initiative and expects sales of $446,838 during the first year, and the gross profit margin to be 25%. To prepare for this, they plan to acquire 49 days worth of inventory. Their vendor will allow 48 days to pay its invoices. The company plans to sell only on account to its customers, so sales will be entirely credit based, and the average invoice is expected to take 44 days to collect. What amount of net working capital should be included in the initial investment? Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234 Type your answer...arrow_forwardYanimize company sales in December 2018 were $70,000 and they are expected to rise by $4,500 per month for the next 5 months. Of sales, 80 per cent are collected during the month of sale and the rest two months after sales. The cost of sales is 60 per cent of sales and, the company plans to keep an inventory at the end of each month equal to forty per cent of the anticipated sales for the next month’s sales. Suppliers are paid one month after purchases are made. Monthly wages amount to $4,000, rent and heating $700 and depreciation $600. A machine is to be bought in March for $5,000 paid in cash. The purchase of the machine means that the monthly change for depreciation will increase by $40. The inventory held at January 1st is $14,400. Required: Calculate the estimated cash collection from sales for February and March. Calculate the purchases for February and March. Assuming that the cash balance at 31/01/2019 is $8,000; prepare a cash budget for the two months ending March 31,…arrow_forwardOffice World Inc. has "cash and carry" customers and credit customers. Office World estimates that 25% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months of 2016 are as follows: August $105,000 September 131,000 October 192,000 The Accounts Receivable balance on July 31, 2016, was $70,000. Prepare a schedule of cash collections from sales for August, September, and October. Round all calculations to the nearest whole dollar. Office World Inc. Schedule of Collections from Sales For the Three Months Ending October 31, 2016 August September October Receipts from caşh sales: Cash sales 26,250 32,750 48,000 July sales on account: Collected in August 70,000 August sales on account: Collected in August Collected in September September sales on account:…arrow_forward
- Betta Jets, a toy wholesaler, is hoping to expand into manufacturing its own products. The business owners have provided you with the following information: All sales are on credit. The company collects 70% in the month following the sale and 30% two months following the sale. All purchases of stock are paid for one month after the purchase. Equipment costing $250,000 is expected to be acquired and paid for in July. The selling and distribution expenses are $48 000 each month. Administrative expenses are $42 000 per month. This includes $5 000 of depreciation expense. Selling Expenses and Administrative Expenses are paid in the month they are incurred. The cash balance on 1 July 2022 is $28 000. The following sales and purchases data in 2022 have been compiled for the preparation of the budget: April May June July $ $ $ $ Purchases 300 000 360 000 340 000 400 000 Sales 800 000 860 000 840 000 880 000 REQUIRED: Prepare…arrow_forwardChatsworth Company Month Expected Sales July $40,000 August $50.000 September $30,000arrow_forwardRooney Pointers Corporation expects to begin operations on January 1, year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Rooney expects sales in January year 1 to total $380,000 and to increase 15 percent per month in February and March. All sales are on account. Rooney expects to collect 67 percent of accounts receivable in the month of sale, 23 percent in the month following the sale, and 10 percent in the second month following the sale. Required a. Prepare a sales budget for the first quarter of year 1. b. Determine the amount of sales revenue Rooney will report on the year 1 first quarterly pro forma income statement. c. Prepare a cash receipts schedule for the first quarter of year 1. d. Determine the amount of accounts receivable as of March 31, year 1. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Prepare a sales budget for the first quarter of year 1. Sales Budget…arrow_forward
- Munoz Pointers Corporation expects to begin operations on January 1, year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Munoz expects sales in January year 1 to total $270,000 and to increase 15 percent per month in February and March. All sales are on account. Munoz expects to collect 69 percent of accounts receivable in the month of sale, 24 percent in the month following the sale, and 7 percent in the second month following the sale. Required a. Prepare a sales budget for the first quarter of year 1. b. Determine the amount of sales revenue Munoz will report on the year 1 first quarterly pro forma income statement. c. Prepare a cash receipts schedule for the first quarter of year 1. d. Determine the amount of accounts receivable as of March 31, year 1. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Determine the amount of accounts receivable as of March 31, year 1. (Do not…arrow_forwardHelen Bowers, owner of Helen's Fashion Designs, is planning torequest a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2015 and 2016: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second ‘month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately $27,000 a month. Lease payments under long-term leases are $9,000 a month. Depreciafion charges are $36,000 a month. Miscellaneous expenses are $2,700 a month. Income tax payments of 563,000 are due in September and December. A progress payment of $180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of 590,000…arrow_forwardNazmi Shah Sdn Bhd wishes to expand its business by opening an additional two more stores and needs to apply a bank loan. Therefore, there is needed to prepare an acceptable three-month financial plan for January until March. The following are sales and purchase information: 40 percent of the sales incurred are cash sales, while the balance are credit sales and will be collected equally for the second and third month after the sales. Nazmi Shah pays 50 percent of its purchase immediately and the balance will be paid in the month after purchases. Additional information: i. Labor expenses are 10 percent of the current month’s sales.ii. Overhead expenses are recorded at RM10,000 per month.iii. Interest payments of RM8,000 are due in January and March.iv. A cash dividend of RM40,000 is scheduled to be paid in February.v. Depreciation expenses are RM10,000 per month.vi. Tax payment of RM25,000 are due in January and April.vii. Purchase a new asset of RM40,000 in January…arrow_forward
- Austin Computers company sales in December 2018 were $80,000 and they are expected to rise by $5,000 per month for the next 5 months. Of sales, 80 per cent are collected during the month of sale and the rest two months after sales. The cost of sales is 60 per cent of sales and, the company plans to keep an inventory at the end of each month equal to 40 per cent of the anticipated sales for the next month’s sales. Suppliers are paid one month after purchases are made. Monthly wages amount to $4,500, rent and heating $750 and depreciation $600. A machine is to be bought in March for $6,000 paid in cash. The purchase of the machine means that the monthly change for depreciation will increase by $40. The inventory held at January 1st is $15,500. Required: Calculate the estimated cash collection from sales for February and March. Calculate the purchases for February and March. Assuming that the cash balance at 31/01/2019 is $10,000; prepare a cash budget for the two months ending March…arrow_forwardCaldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Caldwell buys 100,900 units at an average unit cost of $19 and sells them at an average unit price of $29. The firm also has fixed operating costs of $250,900 for the year. Caldwell's customers are demanding a 19% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 14% discount. Required: Caldwell has estimated that it can reduce the number of purchase orders to 770 and can decrease the cost of shipment by $12 with minor changes in its operations. Any further cost savings must come from reengineering the warehousing processes. What is the maximum cost (i.e., target cost) for warehousing if the firm desires to earn the same amount of profit next year?arrow_forwardGibson Pointers Corporation expects to begin operations on January 1, year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Gibson expects sales in January year 1 to total $240,000 and to increase 20 percent per month in February and March. All sales are on account. Gibson expects to collect 65 percent of accounts receivable in the month of sale, 21 percent in the month following the sale, and 14 percent in the second month following the sale. Required Prepare a sales budget for the first quarter of year 1. Determine the amount of sales revenue Gibson will report on the year 1 first quarterly pro forma income statement. Prepare a cash receipts schedule for the first quarter of year 1. Determine the amount of accounts receivable as of March 31, year 1.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License