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Precision Machines Student Note: Fill in the light yellow
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Hi there,  I'm having trouble with this assignment, and I was hoping you could complete it, and I can compare against my trial document.

Here is the case study to start you off, and thanks for the assistance :)


Read the following case study:

Precision Machines is preparing a financial plan for the next six months to determine the financial needs of the company. The historical analysis of the company?s sales shows that the company?s total sales are 30% cash sales and 70% credit sales.  Further analysis of credit sales shows that the company receives 50% of the credit sales one month after the sale and the remaining 50% in the second month after the sale. This means the cash collections from sales are 30% in the first month of the sale, 35% in the second month, and 35% in the third month. 

The materials purchased by the company amounts to 50% of the sales for the month.  The company pays for the purchases one month after the initial purchase. The company likes to maintain a cash balance of $5,000. The cost of borrowing is 10%.  The company plans to pay off the loan whenever there is a surplus and borrow when there is a deficit. 

The attached spreadsheet shows revenues (sales), expenses, capital expenditures, and other expenses for Precision Machines? next six months.  Using the information given on the spreadsheet, prepare a cash budget for January through June and determine the cash surplus, deficit, and the financing needs of the company.  Write a 300-word essay recommending a cash management strategy for the company that will minimize the financing cost and increase the cash flows for the company.


Precision Machines

 

Student Note: Fill in the light yellow cells

 

Data:

 

Annual Cost of borrowing

 

Minimum Cash Balance

 

Beginning Cash Balance

 

Revenues (Sales)

 


 

Cash Collections

 

First Month (30%)

 

Second Month (35%)

 

Third Month (35%)

 

Total Collections

 

Cash Disbursements

 

Material Purchases

 

Salaries

 

Wages

 

Other Expenses

 

Capital Expenditure

 

Dividends

 

Interest

 

Total Disbursements

 

Cash flows

 

Net cash flows

 

Cumulative cash flows

 

Minimum Cash Balance

 

Cash Surplus or (Deficit)

 


 

Recommendations:

 


 

November

 


 

December

 


 

January

 


 

February

 


 

$40,000.00

 


 

$50,000.00

 


 

$48,000.00

 


 

$55,000.00

 


 

November

 


 

December

 


 

January

 


 

February

 


 

6,000.00

 

3,000.00

 


 

6,000.00

 

3,500.00

 


 

10.00%

 

$5,000.00

 

$7,500.00

 


 

March

 


 

April

 


 

May

 


 

June

 


 

$35,000.00

 


 

$50,000.00

 


 

$65,000.00

 


 

$40,000.00

 


 

March

 


 

April

 


 

May

 


 

June

 


 

6,000.00

 

3,000.00

 


 

6,000.00

 

3,200.00

 


 

6,000.00

 

3,500.00

 


 

6,000.00

 

3,000.00

 


 

45,000.00

 

1,000.00

 


 

1,000.00

 


 

 







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