Prepare a monthly cash budget for Cyrus Brown Mfg for a 9-month period March through November using the data below in excel:
March - $100,000, April $275,000, May - $320,000, June - $450,000, July - $700,000, August - $700,000, Sept - $825,000, October - $500,000, November - $115,000.
Collected estimates of the forecasts sates: Pymt Collection within the month sale = 25%, Pymt collection the month following sales = 55%, pymt collection the second month following sales = 20%
Payment for direct mfg. costs like raw materials and labor are made during the month that follows the onein which such costs have incurred: March - $187,500, April - $206,250, May - $375,000, June - $337,500, July - $431,250, August - $640,000, Sept - $295,000, October - $425,000. Admin salaries approximate $35,000 a month, lease payments around $15,000 a month, depreciation charges $15,000 a month, a one time new plant investment for $95,000 is expected to be incurred and paid in June, income tax payments estimated to be $55,000 in June and Sept, miscellaneous cost estimated $10,000 a month
Based on the cash budget findings answer these questions. 1. Will the company need outside financing?. 2. What is the minium line of credit that CMB will need? 3. What doe you think of CBM's cash position during the budget period? 4. If you wre a bank manager, would wou want CBM as your cliet? Why or why not?