Financial Management

Pursuant to the request of Mr. Cyrus Brown we ask prepared a periodical interchange budget for the nine month period, surround with November. Illustrated below are our findings.

sueAprilMayJuneJulyAugustSeptemberOctoberNovemberSALES$250,000.00$275,000.00$320,000.00$450,000.00$575,000.00$700,000.00$825,000.00$350,000.00$285,000.00COLLECTION OF A/R 10%$25,000.00$27,500.00$32,000.00$45,000.00$57,500.00$70,000.00$82,500.00$35,000.00$28,500.00MONTH pursual (65%) $162,500.00$178,750.00$208,000.00$292,500.00$373,750.00$455,000.00$536,250.00$227,500.00SECOND MONTH FOLLOWING 25% $62,500.00$68,750.00$80,000.00$112,500.00$143,750.00$175,000.00$206,250.00TOTAL CASH RECEIPTS$25,000.00$190,000.00$273,250.00$321,750.00$430,000.00$556,250.00$681,250.00$746,250.00$462,250.00COST OF MATERIALS -$187,500.00-$206,250.00-$240,000.00-$337,500.00-$431,250.00-$525,000.00-$618,750.00-$262,500.00RENT PAYMENTS-$15,000.00-$15,000.00-$15,000.00-$15,000.00-$15,000.00-$15,000.00-$15,000.00-$15,000.00-$15,000.00WAGES AND SALARIES-$35,000.00-$35,000.00-$35,000.00-$35,000.00-$35,000.00-$35,000.00-$35,000.00-$35,000.00-$35,000.00TAX PAYMENTS -$55,000.00 -$55,000.00FIXED summation OUTLAYS -$95,000.00MISC EXPENSES-$10,000.00-$10,000.00-$10,000.00-$10,000.00-$10,000.00-$10,000.00-$10,000.00-$10,000.00-$10,000.00TOTAL CASH DISBURSEMENTS-$60,000.00-$247,500.00-$266,250.00-$450,000.00-$397,500.00-$491,250.00-$640,000.00-$678,750.00-$322,500.00NET CASH FLOW-$35,000.00-$57,500.00$7,000.00-$128,250.00$32,500.00$65,000.00$41,250.00$67,500.00$139,750.00ADD:BEGINNING CASH$50,000.00ENDING CASH$15,000.00-$57,500.00$7,000.00-$128,250.00$32,500.00$65,000.00$41,250.00$67,500.00$139,750.00LESS: nominal CASH BALANCE-$50,000.00-$50,000.00-$50,000.00-$50,000.00-$50,000.00-$50,000.00-$50,000.00-$50,000.00-$50,000.00REQUIRED TOTAL FINANCING$35,000.00$107,500.00$43,000.00$178,250.00$17,500.00$0.00$8,750.00$0.00$0.00EXCESS CASH BALANCE $15,000.00 $67,500.00$139,750.00To fall if the company pull up stakes deficiency outside financing you need to look closely at the cash budget. Potential creditors phthisis this to ascertain viability. From the Cash Budget we can see that CBM lead need financing for the first five months and accordingly spare financing in September. The cash budget tells us if there is a cash shortage or a cash excess at the end of each month.



This is based on the set minimum requirement of cash balance. From March to July then in September total financing required is $390,000.00. The following amounts represent the recognized cash shortage for these six months.

March - $35,000.00April - $107,500.00May - $43,000.00June - $178,250.00July - $17,500.00September - $8,750.00Total amount of financing = $390,000.00These numbers are generated by subtracting the finishing cash balance at the end of each month from the minimum cash balance. This tells us what the plug figure would be to have the specified amount of cash on hand. The figures for the months of March though July, and September are positive values which way that the firm will not be able to generate enough internal financing to support its needs and growth. CBM will need to raise funds externally though acquire or equity. Since CBM is a new company and does not have equity yet, it will need to finance by borrowing.

In August, CBM shows a negative value for external...

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