Posted: April 24th, 2025

finacial management

  

Good cash management is impossible without an analysis of the cash collections and cash disbursements of a company. Cash budgets provide a gauge for determining credit, disbursement, and discount policies. Cash budgets are effective control devices for monitoring cash and determining financing requirements.

Cash budgets are essential to all small businesses. In this assignment, you are required to do the following:

• Develop a spreadsheet with a cash      budget with lagging collections
• Determine the net cash flows for the      year
• Forecast the cumulative dollar amount      of the external financing required for the year

You are also required to prepare a 3-page analysis of the results of your cash budget.

Middletown Construction, Inc. has estimated the following sales forecast over the next 12 months (they close in the winter):

  

January

$0
 

February

$0
 

March

$275,000

 

April

$275,000
 

May

$312,000

 

June

$417,000

 

July

$714,000

 

August

$611,000

 

September

$827,000

 

October

$500,000

 

November

$116,000

 

December

$0

The company also gathered the following collection estimates regarding the forecast sales:

• Payment collection within the month of      sale = 20%
• Payment collection the month following      sales = 60%
• Payment collection the second month      following sales = 20%

Payments for raw materials and labor costs are paid the month after the purchase and are estimated as follows:

  
March

$220,000

 
April

$240,000

 
May

$225,000

 
June

$287,000

 
July

$350,000

 
August

$415,000

 
September

$242,000

 
October

$214,000

 
November

$222,000

Additional financial information is as follows:

• Administrative salaries will      approximately amount to $30,000 a month.
• Lease payments are around $10,000 a      month.
• A one-time new plant investment for      $23,000 is expected to incur and be paid in June.
• Income tax payments estimated to be      around $50,000 will be due in both June and September.
• Miscellaneous costs are estimated to      be around $5,000 a month.
• Cash on hand on March 1 will be around      $50,000, and a minimum cash balance of $50,000 shall be on hand at all      times

Sheet1

FINA425 UNIT 3 INDIVIDUAL ASSIGNMENT TEMPLATE Student Name: Betty Ann Morrison_______________________ Date submitted: __1

0

/01/2024______________________ Middletown Construction, Inc. JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER SALES FORECAST

0
0

275,000

275,000

312,000 417,000 714,000 611,000 827,000 500,000 116,000

0
CASH COLLECTIONS MONTH OF SALE 20% FIRST MONTH AFTER SALE 60% SECOND MONTH AFTER SALE

20%
TOTAL CASH INFLOWS $

– 0 $ – 0

$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0

JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER

DIRECT MANUFACTURING COSTS

– 0
– 0

220,000 240,000 225,000 287,000 3

50,000 415,000 242,000 214,000 222,000

– 0
PAYMENTS FOR RAW MATERIALS ARE MANUFACTURING COST PAYMENTS ADMINISTRATIVE SALARIES LEASE PAYMENTS MISCELLANEOUS TAX PAYMENTS NEW PLANT COSTS TOTAL CASH OUTFLOWS

$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
MONTHLY NET CASH GAIN OR LOSS

$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
CUMULATIVE NET CASH GAIN OR LOSS (YTD)

$ – 0
$ – 0
$ – 0

JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER

CASH FLOW SUMMARY 1. Cash balance at start of month

50,000
2. Net cash gain (loss) during month 3. Cash bal. at end of month (before financing) 4. Minimum cash balance desired 5. Surplus cash (OR) Deficit cash (Line 3 – Line 4) EXTERNAL FINANCING SUMMARY 6. External financing balance – start of month 7. New financing reqd (negative of Line 5) (if deficit!) 8. Financing repayments (if surplus!) 9. Ext financing balance – end of month 10.Cash bal at end of mo (Line3 + Line7 + Line8) Developed by Patrice Nybro June 22, 2020

Sheet2

Sheet3

Sheet1

FINA425 UNIT 3 INDIVIDUAL ASSIGNMENT TEMPLATE Student Name: Betty Ann Morrison_______________________ Date submitted: __1

0

/01/2024______________________ Middletown Construction, Inc. JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER SALES FORECAST

0
0

275,000

275,000

312,000 417,000 714,000 611,000 827,000 500,000 116,000

0
CASH COLLECTIONS MONTH OF SALE 20% FIRST MONTH AFTER SALE 60% SECOND MONTH AFTER SALE

20%
TOTAL CASH INFLOWS $

– 0 $ – 0

$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0

JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER

DIRECT MANUFACTURING COSTS

– 0
– 0

220,000 240,000 225,000 287,000 3

50,000 415,000 242,000 214,000 222,000

– 0
PAYMENTS FOR RAW MATERIALS ARE MANUFACTURING COST PAYMENTS ADMINISTRATIVE SALARIES LEASE PAYMENTS MISCELLANEOUS TAX PAYMENTS NEW PLANT COSTS TOTAL CASH OUTFLOWS

$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
MONTHLY NET CASH GAIN OR LOSS

$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
$ – 0
CUMULATIVE NET CASH GAIN OR LOSS (YTD)

$ – 0
$ – 0
$ – 0

JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER

CASH FLOW SUMMARY 1. Cash balance at start of month

50,000
2. Net cash gain (loss) during month 3. Cash bal. at end of month (before financing) 4. Minimum cash balance desired 5. Surplus cash (OR) Deficit cash (Line 3 – Line 4) EXTERNAL FINANCING SUMMARY 6. External financing balance – start of month 7. New financing reqd (negative of Line 5) (if deficit!) 8. Financing repayments (if surplus!) 9. Ext financing balance – end of month 10.Cash bal at end of mo (Line3 + Line7 + Line8) Developed by Patrice Nybro June 22, 2020

Sheet2

Sheet3