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    Cash Budgeting; ways to maintain cash flow

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    Theorize the following questions based upon provided data. See attached file.

    a. What changes could the company make if they wanted to maintain a cash balance of $650,000, rather than $350,000?
    b. What is the company's cost of borrowing was 6%, rather than 12%? What recommendations would you make to them?
    c. What is the company experienced 10% of bad debt per year? What would be the impact on their ending cash?

    Revenues Schedule 1 $36,860,000
    Cost of goods sold Schedule 7 24,440,000
    Gross margin 12,420,000
    Operating costs
    Product design Schedule 8 $1,024,000
    Marketing costs Schedule 8 3,725,900
    Distribution costs Schedule 8 3,876,000 8,625,900
    Operating income 3,794,100

    Budgeted Cash Flows Quarters
    1 2 3 4
    Collections from customers $9,136,600 $10,122,000 $10,263,200 $8,561,200
    Disbursements
    Direct materials 2,947,605 2,714,612 2,157,963 2,155,356
    Payroll 3,604,512 2,671,742 2,320,946 2,562,800
    Manufacturing overhead costs 2,109,018 1,530,964 1,313,568 1,463,450
    Nonmanufacturing costs 1,847,750 1,979,000 1,968,250 1,705,000
    Machinery purchase â?" â?" 758,000 â?"
    Income taxes 725,000 400,000 400,000 400,000

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    https://brainmass.com/business/cash-budgeting/cash-budgeting-ways-to-maintain-cash-flow-466373

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    Solution Preview

    Your tutorial is in Excel (attached). Click in cells to see computations.

    a. What changes could the company make if they wanted to maintain a cash balance of $650,000, rather than $350,000?

    I don't have the opening cash but I am presuming that the $350,000 is approximately the "net" cash for the year (see E123) after ...

    Solution Summary

    Your tutorial is in Excel (attached). Click in cells to see computations.

    $2.19

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