A firm has the following monthly pattern of sales: January $ 200 February 300 March 600 April 1,200 May 600 June 300 Sixty percent of the sales are on credit and are collected after a month. The company pays wages each month that are 60 percent of sales and has fixed disbursements (for example, rent) of $150 a month. In March it receives $250 from a bond that matures; in April and June it makes a tax payment of $150. Management maintains a cash balance of $200 at all times. Construct a cash budget that indicates the firm’s monthly needs for short-term financing. Its beginning cash position is $200. Round your answers to the nearest dollar. Enter the disbursements values in Part 2 and desired level of cash in Part 3 as positive values. Use a minus sign to enter cash outflows, shortage of cash values, negative initial and ending cash positions in Part 3, if any. Do not leave any cells blank. If the answer is zero, enter "0". Part 1 January February March April May June Anticipated sales $ $ $ $ $ $ Cash sales $ $ $ $ $ $ Accounts collected $ $ $ $ $ $ Other receipts $ $ $ $ $ $ Total receipts $ $ $ $ $ $ Part 2 Variable disbursements $ $ $ $ $ $ Fixed disbursements $ $ $ $ $ $ Other disbursements $ $ $ $ $ $ Total cash disbursements $ $ $ $ $ $ Part 3 Net change in cash $ $ $ $ $ $ Initial cash position $ $ $ $ $ $ Ending cash position $ $ $ $ $ $ Desired level of cash $ $ $ $ $ $ Excess (shortage) of cash $ $ $ $ $ $

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P

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Question

A firm has the following monthly pattern of sales:

January	$	200
February		300
March		600
April		1,200
May		600
June		300

Sixty percent of the sales are on credit and are collected after a month. The company pays wages each month that are 60 percent of sales and has fixed disbursements (for example, rent) of $150 a month. In March it receives $250 from a bond that matures; in April and June it makes a tax payment of $150. Management maintains a cash balance of $200 at all times. Construct a cash budget that indicates the firm’s monthly needs for short-term financing. Its beginning cash position is $200. Round your answers to the nearest dollar. Enter the disbursements values in Part 2 and desired level of cash in Part 3 as positive values. Use a minus sign to enter cash outflows, shortage of cash values, negative initial and ending cash positions in Part 3, if any. Do not leave any cells blank. If the answer is zero, enter "0".

Part 1	January	February	March	April	May	June
Anticipated sales	$	$	$	$	$	$
Cash sales	$	$	$	$	$	$
Accounts collected	$	$	$	$	$	$
Other receipts	$	$	$	$	$	$
Total receipts	$	$	$	$	$	$
Part 2
Variable disbursements	$	$	$	$	$	$
Fixed disbursements	$	$	$	$	$	$
Other disbursements	$	$	$	$	$	$
Total cash disbursements	$	$	$	$	$	$
Part 3
Net change in cash	$	$	$	$	$	$
Initial cash position	$	$	$	$	$	$
Ending cash position	$	$	$	$	$	$
Desired level of cash	$	$	$	$	$	$
Excess (shortage) of cash	$	$	$	$	$	$

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