Financial Planning - Cash and Fin Forecast Up to Exer. 3-8

8/7/2019 Financial Planning - Cash and Fin Forecast Up to Exer. 3-8

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3-12

Cash Budget -- Sensitvity Analysis

October November

Pessimistic Most Likely Optimistic Pessimistic Most Likely Optimistic

Total Cash Receipts 260.00 342.00 462.00 200.00 287.00 366

Total Cash Disbursements 285.00 326.00 421.00 203.00 261.00 313

Net Cash Flows (25.00) 16.00 41.00 (3.00) 26.00 53

Beginning Cash (20.00) (20.00) (20.00) (45.00) (4.00) 21

Ending Cash (45.00) (4.00) 21.00 (48.00) 22.00 74

Minimum Cash Balance 18 18 18 18 18

Financing 63.00 22.00 66.00

Excess Cash-- MMP 3.00 4.00 56

Pessimistic

Play/ Sandbox:

Cash Beginning, with Notes Paya (20.00) 18.00 18.00

Net Cash flows (25.00) (3.00) (96.00)

Add; Notes Payable 63.00 3.00 96.00 162.00 checkMMP

Less: Money Market Placements

Cash Ending, with notes Payable 18.00 18.00 18.00

Most likely

Play/ Sandbox: -- Scenario 1


Net Cash flows 16.00 26.00 (38.00)

Add; Notes Payable 22.00 38.00

MMP

Less: Money Market Placements 26.00



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Most likely

Play/ Sandbox: -- Scenario 2


Net Cash flows 16.00 26.00 (38.00)

Add; Notes Payable 22.00 (22.00) 34.00 check

MMP 4.00



Optimistic

Play/ Sandbox:


Net Cash flows 41.00 53.00 38.00

Add; Notes Payable

MMP

Less: Money Market Placeme 3.00 53.00 38.00 94.00 check


3-13 Multiple Cash Budgets -- Brownstein -- Sensitivity Analysis

Base Case/ Most Likely1 2 3

Cash Receipts

Sales 100,000 100,000 100,000

Asset Sale 8,000

100,000 100,000 108,000

Cash Disbursements

Purchases 60,000 60,000 60,000

Salaries and Wages

Fixed 10,000 10,000 10,000

Variable 5% 5,000 5,000 5,000

Tax 20,000

CAPEX 15,000

95,000 90,000 75,000

Net Cash flows 5,000 10,000 33,000

Beginning Cash Balance 0 5,000 15,000

Ending Cash balance 5,000 15,000 48,000


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Worst Case/ Pessimistic1 2 3

Cash ReceiptsSales 80,000 80,000 80,000

Asset Sale 8,000

80,000 80,000 88,000

Cash Disbursements

Purchases 60,000 60,000 60,000

Salaries and Wages

Fixed 10,000 10,000 10,000

Variable 5% 4,000 4,000 4,000

Tax 20,000

CAPEX 15,000

94,000 89,000 74,000

Net Cash flows (14,000) (9,000) 14,000

Beginning Cash Balance 0 (14,000) (23,000)

Ending Cash balance (14,000) (23,000) (9,000)

To further analyze, apply the Sandbox./ play model

Play/ Sandbox: Assume minimum cash balance of 5

Cash Beginning, with Notes Payable and Placement 0.00 5,000 5,000

Net Cash flows (14,000) (9,000) 14,000

Add; Notes Payable 19,000 9,000 (14,000)

MMP

Less: Money Market Placements 0

Cash Ending, with notes Payable and Placement 5,000 5,000 5,000

Best Case/ Optomistic1 2 3

Cash Receipts

Sales 120,000 120,000 120,000

Asset Sale 8,000

120,000 120,000 128,000

Cash Disbursements

Purchases 60,000 60,000 60,000

Salaries and Wages

Fixed 10,000 10,000 10,000

Variable 5% 6,000 6,000 6,000

Tax 20,000

CAPEX 15,000

96,000 91,000 76,000


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Play/ Sandbox: Assume minimum cash balance of 5

Cash Beginning, with Notes Payable and Placement 0.00 5,000 5,000

Net Cash flows 24,000 29,000 52,000

Add; Notes PayableMMP

Less: Money Market Placements 19,000 29,000 52,000 100,000

Cash Ending, with notes Payable and Placement 5,000 5,000 5,000

Pro- forma Income Statement:

cost of goods sold

operating expenses

interest expense

as Percentage of Projected sales. This technique assumes that all costs are variable costs.

The weakness of this approach is that net profit may be overstated for firms with high fixed costs

and understated for firms with low fixed costs. The strength of this approach is the ease of calculation.

ST 3-3 Euro Designs

Pro-forma Income Statement

Euro Designs, Inc.

Income Statement

For the Year Ended December 31, 2004

Sales Revenue 3,900,000.00

Less: COGS 2,145,000.00 55%

Gross Profit 1,755,000.00

Less: Operating Expenses 468,000.00 12%

Operating Profits 1,287,000.00

Less: Interest Expense 325,000.00

Net Income Before Taxes 962,000.00

Less Taxes 384,800.00 40%

Net Profits After Taxes 577,200.00

Less Cash Dividends 320,000.00

Net Income to RE 257,200.00

Percentage of sales method --- the finance manager begins with sales forecasts and uses values for


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ST 3-14 Metroline Manufacturing

Pro-forma Income Statement Percentage of Sales Method

Euro Designs, Inc.

Income StatementFor the Year Ended December 31, 2004

Sales Revenue 1,500,000.00

Less: COGS 975,000.00 65%

Gross Profit 525,000.00

Less: Operating Expenses 129,000.00 8.60%

Operating Profits 396,000.00



Less Taxes 144,400.00 40%



Net Income to RE 146,600.00 check

Pro-forma Income Statement Fixed and Variable Costs identified

Euro Designs, Inc.

Income Statement

For the Year Ended December 31, 2004

Sales Revenue 1,500,000.00 Cost of Goods Sold Schedule

Fixed 210,000.

Less: COGS 960,000.00 Variable 750,000.

960,000.

Gross Profit 540,000.00

Less: Operating Expenses 126,000.00 Operating Expenses Schedule

Fixed 36,000.

Operating Profits 414,000.00 Variable 90,000.

126,000.



Less Taxes 151,600.00 40%



Net Income to RE 157,400.00 check

while calculating others. This method assumes that values of variables such as cash, accounts receiv

and inventory can be forced to take on certain values rather than occur as a natural flow of

Judgmental Approach is used to develop pro-forma balance sheet by estimating some balance shee


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Proforma Balance Sheet

Leonard Industries

Balance Sheet

December 31, 2003

Assets Liabilities and Stockholders

Cash 50,000.00 Accounts Payable

Marketable Securities 15,000.00 Accruals

Accounts Receivables 300,000.00 Other Current Liabilities

Inventories 360,000.00

total Current Assets 725,000.00 total curre

Net Fixed Assets 658,000.00 Long term debt

Total Assets 1,383,000.00 Common Stock

Retained Earnings

Additional financing need

Total Liabilties and Stockho

check

Assumptions

Sales 3,000,000.00 Total Assets

Total L & SHE

Accounts Receivable 300,000.00 10%

AFN

Inventories 360,000.00 12%

Machine 90,000.00

Accounts Payable 420,000.00 14%

Net Profit Margin 120,000.00 4%

Dividends 70,000.00

Net Fixed Assets

Beginning 600,000.00

Plus new 90,000.00

Total 690,000.00

Less; Depreciation 32,000.00

Ending 658,000.00

Retained Earnings, beginning 220,000.00


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ST 3-2

Carroll Company

February March

Cash Receipts 150.00 425.00

Bank Notes

Cash Disbursements 400.00 300.00

Net Cashflows (250.00) 125.00

Beginning Cash balance (250.00)

Ending Cash Balance (250.00) (125.00)

Minimum Cash Balance

Excess Cash Balance for Placement

Financing Required Notes payable

Cash Receipts Assumptions:

February March

Sales Forecast 500.00 600.00

Collection Forecast


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Cash Sales 30% 150.00 180.00

Receivable Collection 70% 350.00 420.00

70% 245

30%

Receivable Collection 0 245

Total Receipts 150.00 425.00

Accounts Receivable ScheduleBeginning Receivable 350.00

Add: New 420.00

Total 770.00

Less: Collection 245.00Ending Receivable 350.00 525.00

Play/ Sandbox

Cash Beginning, with Notes Payable and Placement

Net Cash flows

Add; Notes Payable

MMP


Cash Ending, with notes Payable and Placement 115

Carroll CompanyPro-forma Balance Sheet

Cash 25.00

Marketable Securities 42.00

Accounts Receivable 182.00

Notes payable 109.00


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Cash Receipts

3-7' Actual

April May June

Sales 65,000.00 60,000.00 70,000.00

Cash Sales 50% 32,500.00 30,000.00 35,000.00

Accounts Receivable 50% 32,500.00 30,000.00 35,000.00

Collection Matrix

1st month 50% 16,250.00 15,000.00

2nd month 16,250.00

AR Collection 0.00 16,250.00 31,250.00

Cash Receipts 32,500.00 46,250.00 66,250.00

Cash Disbursements

3-8'

February March April

Sales 500,000.00 500,000.00 560,000.00

Purchases 60% 300,000.00 336,000.00 366,000.00

Payment Mode

Cash Payment 10% 30,000.00 33,600.00 36,600.00

After 1 month 50% 150,000.00 168,000.00

After 2 months 40% 120,000.00

Total Payment - Purchases 30,000.00 183,600.00 324,600.00

Rent 8,000.00 8,000.00 8,000.00


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Wages and Salaries

Fixed 6,000.00 6,000.00 6,000.00

Variable 7% 35,000.00 35,000.00 39,200.00

Total 41,000.00 41,000.00 45,200.00

Taxes

CAPEX 75,000.00

Interest

Cash Dividends 12,500.00

Total Cash Disbursements 79,000.00 232,600.00 465,300.00

check

Cash Budget -- Basic

3-8' Actual

March April May

Sales 50,000.00 60,000.00 70,000.00

Cash Sales 20% 10,000.00 12,000.00 14,000.00

Receivable for collection

after 1 month 60% 30,000.00 36,000.00

after 2 months 20% 10,000.00

Collected receivables 0.00 30,000.00 46,000.00

Other Income 2,000.00 2,000.00 2,000.00

Notes/MMP

Total Cash Receipts 12,000.00 44,000.00 62,000.00

Actual

March April May

Cash Disbursements


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Purchases 50,000.00

Rent 3,000.00 3,000.00 3,000.00

Wages and Salaries 10% 5,000.00 6,000.00

Dividends

Principal and Interest

CAPEX

Taxes


Net Cashflows 9,000.00 36,000.00 3,000.00

Beginning Cash Balance 5,000.00

Ending Cash Balance 8,000.00

Minimum cash balance 5,000.00

Excess Cash -- Placement 3,000.00

Notes Payable from the bank

Play/ Sandbox:

Cash Beginning, with Notes Payable and Placement 5,000.00

Net Cash flows 3,000.00

Add; Notes Payable

MMP

Less: Money Market Placements 3,000.00Cash Ending, with notes Payable and Placement 5,000.00


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Cash Budget -- Advanced Xenocore, Inc3-9'

2003

September October November

Sales 210,000.00 250,000.00 170,000.00

Purchases 120,000.00 150,000.00 140,000.00

Cash Receipts

Cash Sales 20% 42,000.00 50,000.00 34,000.00

Receivable Collection

after 1st month 40% 84,000.00 100,000.00

after 2nd month 40% 84,000.00

Total 42,000.00 134,000.00 218,000.00

Other Cash Receipts 12,000.00

MMP/ Financing

Total Cash Receipts 54,000.00 134,000.00 218,000.00


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Cash Disbursements

Purchases -Cash 10% 12,000.00 15,000.00 14,000.00

Payable Balance

After 1 month 50% 60,000.00 75,000.00

After 2 months 40% 48,000.00

Total Purchases paid 12,000.00 75,000.00 137,000.00

Wages and Salaries 20% 42,000.00 50,000.00

Rent 20,000.00 20,000.00 20,000.00

Interest

Principal Payment

Dividends

Taxes

CAPEX

Placements 0.00


Net Cash Flows 22,000.00 (3,000.00) 11,000.00

Beginning Cash Balance 22,000.00

Ending Cash Balance 22,000.00 33,000.00

B. Maintainign Balance 15,000.00

Excess Cash -- Money Market Placements 18,000.00

Financing Required-- Notes Payable


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Play/ Sandbox:

Cash Beginning, with Notes Payable and Placement 22,000.00

Net Cash flows 11,000.00

Add; Notes PayableMMP

Less: Money Market Placements 18,000.00

Cash Ending, with notes Payable and Placement 15,000.00

3-12

Cash Budget -- Sensitvity Analysis

October

Pessimis Most Likely Optimistic Pessimistic

Total Cash Receipts ### 342.00 462.00 200.00

Total Cash Disbursements ### 326.00 421.00 203.00

Net Cash Flows ### 16.00 41.00 (3.00)

Beginning Cash ### (20.00) (20.00) (45.00)

Ending Cash ### (4.00) 21.00 (48.00)

Minimum Cash Balance 18 18 18 18

Financing ### 22.00 66.00

Excess Cash-- MMP 3.00

Pessimistic

Play/ Sandbox:

Cash Beginning, with Notes Payable ### 18.00 18.00

Net Cash flows ### (3.00) (96.00)

Add; Notes Payable ### 3.00 96.00

MMP


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Cash Ending, with notes Payable an ### 18.00 18.00

Most likely

Play/ Sandbox:


Net Cash flows ### 26.00 (38.00)

Add; Notes Payable ### 38.00

MMP



Optimistic

Play/ Sandbox:


Net Cash flows ### 53.00 38.00Add; Notes Payable

MMP

Less: Money Market Placements 3.00 53.00 38.00



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Forecast

April May June

519.00 382.00 242.00

600.00 500.00 200.00

(81.00) (118.00) 42.00

115.00 34.00 (84.00)

34.00 (84.00) (42.00)

25.00 25.00 25.00

9.00

109.00 67.00 ???????

April May June July August

400.00 200.00 200.00

Do w

need t

this


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120.00 60.00 60.00

280.00 140.00 140.00 140.00

294 196 98

105 126 84 42182.00

399 322 182

519.00 382.00 242.00

525.00 406.00 224.00

280.00 140.00 140.00

805.00 546.00 364.00

399.00 322.00 182.00406.00 224.00 182.00

115.00 25.00 25.00

(81.00) (118.00) 42.00

109.00

9.00

9.00 42.00

25.00 25.00 25.00


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FORECAST

July August

100,000.00 100,000.00

50,000.00 50,000.00

50,000.00 50,000.00

17,500.00 25,000.00

15,000.00 17,500.00

32,500.00 42,500.00

82,500.00 92,500.00 check

Forecast

May June July

610,000.00 650,000.00 650,000.00

390,000.00 390,000.00 0.00

39,000.00 39,000.00 0.00

183,000.00 195,000.00 195,000.00

134,400.00 146,400.00 156,000.00

356,400.00 380,400.00 351,000.00

8,000.00 8,000.00 8,000.00


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6,000.00 6,000.00 6,000.00

42,700.00 45,500.00 45,500.00

48,700.00 51,500.00 51,500.00

54,500.00

30,000.00

413,100.00 524,400.00 410,500.00

check check

Forecast

June July

80,000.00 100,000.00

16,000.00 20,000.00

42,000.00 48,000.00

12,000.00 14,000.00

54,000.00 62,000.00

2,000.00 2,000.00

0.00 0.00

72,000.00 84,000.00 check

Forecast

June July


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70,000.00 80,000.00

3,000.00 3,000.00

7,000.00 8,000.00

3,000.00

4,000.00

6,000.00

6,000.00

93,000.00 97,000.00 check

(21,000.00) (13,000.00) check

8,000.00 (13,000.00)

(13,000.00) (26,000.00)

5,000.00 5,000.00

18,000.00 31,000.00

5,000.00 5,000.00

(21,000.00) (13,000.00)

18,000.00 13,000.00

3,000.00

5,000.00 5,000.00 0.00


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2004

December January February March April

160,000.00 140,000.00 180,000.00 200,000.00 250,000.00

100,000.00 80,000.00 110,000.00 100,000.00 90,000.00

32,000.00 28,000.00 36,000.00 40,000.00 50,000.00

68,000.00 64,000.00 56,000.00 72,000.00 80,000.00

100,000.00 68,000.00 64,000.00 56,000.00 72,000.00

200,000.00 160,000.00 156,000.00 168,000.00 202,000.00

15,000.00 27,000.00 15,000.00 12,000.00

0.00 0.00 0.00

200,000.00 175,000.00 183,000.00 183,000.00 214,000.00 check


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10,000.00 8,000.00 11,000.00 10,000.00 9,000.00 check

70,000.00 50,000.00 40,000.00 55,000.00 50,000.00 check

60,000.00 56,000.00 40,000.00 32,000.00 44,000.00 +

140,000.00 114,000.00 91,000.00 97,000.00 103,000.00

34,000.00 32,000.00 28,000.00 36,000.00 40,000.00

20,000.00 20,000.00 20,000.00 20,000.00 20,000.00

10,000.00 10,000.00

30,000.00

20,000.00 20,000.00

80,000.00

25,000.00

0.00 0.00

219,000.00 196,000.00 139,000.00 153,000.00 303,000.00 check

(19,000.00) (21,000.00) 44,000.00 30,000.00 (89,000.00) check

33,000.00 14,000.00 (7,000.00) 37,000.00 67,000.00

14,000.00 (7,000.00) 37,000.00 67,000.00 (22,000.00) check

15,000.00 15,000.00 15,000.00 15,000.00 15,000.00

22,000.00 52,000.00

1,000.00 22,000.00 37,000.00


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15,000.00 15,000.00 15,000.00 15,000.00 15,000.00

(19,000.00) (21,000.00) 44,000.00 30,000.00 (89,000.00)

1,000.00 21,000.0018,000.00 92,000.00

44,000.00 30,000.00 3,000.00

15,000.00 15,000.00 15,000.00 15,000.00 15,000.00

November December

Most Likely Optimistic Pessimistic Most Likely Optimistic

287.00 366.00 191.00 294.00 353.00

261.00 313.00 287.00 332.00 315.00

26.00 53.00 (96.00) (38.00) 38.00

(4.00) 21.00 (48.00) 22.00 74.00

22.00 74.00 (144.00) (16.00) 112.00

18 18 18 18 18

162.00 34.00

4.00 56.00 94.00


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do you really need ths much financing/credit?


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withdraw the money market placements to finance the cash short fall


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Documents

Financial Planning - Cash and Fin Forecast Up to Exer. 3-8