I need someone that understands finance management to review my case study solution and provide any recommendations or confirm if I completed the assignment correctly. My cash budget file is my solution.

Here are the instruction and the hints given.

This assignment will require you to prepare the cash budget and determine the cash inflows, cash outflows, and the expected change in cash each month.

You need to show your working notes for credit. You must submit your work using excel files (with .xls or .xlsx for credit). Late submissions will not be accepted so please plan accordingly

The management estimates total sales for the period January, 2019 through June, 2019 based on actual sales from the immediate past six months. The following assumptions are made:

 The Sales were $140,000 in July 2018 and then the sales grew by 2% each month in the first three months (i.e., from August to October 2018) and by 5% in the next two months (i.e., in November and December 2018). The sales are expected to grow by 1% each month thereafter.

 35% of the Sales are collected in the same month. 33% of the sales are collected in the following month. 31% of the sales are collected after two months and the remainder are not collected.

 The Purchases are 70% of each month’s sales and paid in the same month.

 Wages and Salaries are $25,000 each month and paid in the same month.

 Other administrative expenses are $15,000 and paid in the same month.

 Depreciation expense is $5,000 each month.

 An electrical device worth $30,000 will be purchased in April 2019. 50% of the amount due will be paid immediately and the balance will be paid in May, 2019.

 The company had previously taken a loan of $125,000. The annual interest rate on the loan amount is 5%. The interest is paid twice a year in June and December each year. Assume that no principal repayments are made in this period, only interest payments are made.

 The company pays rent of $3,500 quarterly (in March, June, September, and December each year).

All,Below are a couple of hints for Mini-case 2:

  1. Refer to Cash Budget from the handout. You can build a similar template.
  2. Enter all cash coming in under Cash Inflows and enter all cash going out under Cash Disbursements (same as Cash Outflows)
  3. Bad debts is cash not collected. Cash inflows records all cash collections in that month, bad debts is cash not collected so it would not have a place in cash inflows. Since bad debts means no cash transaction has occurred, you would simply ignore it when preparing the Cash Budget (so don’t do anything with it).
  4. Also think about depreciation expense – is it a cash expense or a non-cash expense? if it is a cash expense then record it under Cash Outflows. If it is a non-cash expense, then you would simply ignore it when preparing the Cash Budget because cash is not going out.
  5. To calculate the interest payments on company’s debt of say, $125,000, think about how we calculated semi-annual payments (under PMT) in the bond valuation chapter. We would take par value * coupon rate/2. You can think of par value in this example as $125,000

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