Question: A manager from TGR is trying to prepare a cash flow forecast for the years 2014 - 2016.
The estimate sales are:
| Year |
2013 |
2014 |
2015 |
2016 |
2017 |
| Sales (dollars) |
20million |
22million |
24million |
21million |
25million |
These sales will be made on three months' credit and there will be no bad debts.
There are only three cost elements:
1. First, wages amounting to $6 million per year
2. Second, raw material costing one-half of sales for the year. Raw material suppliers grant three months of credit
3. Third, direct overhead (only incurred if the project in undertaken) at $5million per year