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    Preparing a Cash Budget in Excel

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    To avoid any uncertainty regarding his business' financing needs at the time when such needs may arise, Cyrus Brown wants to develop a Cash Budget for his latest venture- Cyrus Brown Manufacturing (CBM). He has estimated the following sales forecast for CBM over the next nine months:

    March 2004 $250,000
    April 275,000
    May 320,000
    June 450,000
    July 575,000
    August 700,000
    September 825,000
    October 350,000
    November 285,000
    He has also gathered the following collection estimates regarding the forecast sales: Collection within the month of sale, 10%; collection the month following sales, 65%, and collection the second month following sales, 25%. Payments for direct manufacturing costs like raw materials and labor are made during the month that follows the one in which such costs have been incurred. These costs are estimated as follows:

    March 2004 $187,500
    April 206,250
    May 240,000
    June 337,500
    July 431,250
    August 525,000
    September 618,750
    October 262,500
    Administrative salaries will approximately amount to $35,000 a month; lease payments around $15,000 a month; depreciation charges, 15,000 a month; a one-time new plant investment in the amount of $95,000 is expected to be incurred and paid in June; income tax payments estimated to be around $ 55,000 will be due in both June and September; and finally, miscellaneous costs are estimated to be around $10,000 a month. Cash on hand on March 1 will be around $50,000; and a minimum cash balance of $50,000 shall be on hand at all times.

    Prepare a monthly cash budget for Cyrus Brown Manufacturing for the nine month period, March through November.
    Based on your findings in part a, will the company need any outside financing?
    What is the minimum line of credit that CBM will need?
    What do you think of CBM's cash position during the budget period? Do you see any concerns for the company in this regard?
    If you were a bank manager would you want CBM as your client? Why or why not?

    Final product should be formatted as the attachment.

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    https://brainmass.com/business/cash-budgeting/preparing-a-cash-budget-in-excel-259106

    Solution Preview

    - Prepare a monthly cash budget for Cyrus Brown Manufacturing for the nine month period, March through November.

    Please see the attached file.

    - Based on your findings in part a, will the company need any outside financing?

    Based on the cash budget, the company would need external financing since there is a cash deficit in some of the months

    - What is the minimum line of credit that CBM will need?

    The ...

    Solution Summary

    The solution explains how to prepare a cash budget in an attached excel spreadsheet as well as answering the questions posed by the asker about this specific budget in 306 words.

    $2.19

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