A B C D E F G H I J K

1 Chapter 26
2 Keafer Manufacturing Working Capital Management
3
4 Input Area:
5
6
7 A/R $ 553,000
8 Percent uncollectible 10%
9 Collection period 57
10 % of purchases for next Q sales 50%
11 Suppliers paid 53
12 % of sales for expenses 25%
13 Interest and dividends $ 148,000
14 Outlay in third Q $ 260,000
15 Beginning cash balance $ 149,500
16 Target cash balance $ 90,000
17 Borrowing rate 1.2%
18 Invested securities 0.5%
19 Beginning short-term borrowing $ -
20
21 Q1 Q2 Q3 Q4
22 Last years' sales $ 735,000 $ 761,000 $ 817,000 $ 709,000
23
24 Growth rate in sales 8.00%
25
26
27 Output Area:
28
29
30 Sales next year $ 793,800.00 $ 821,880.00 $ 882,360.00 $ 765,720.00
31 Sales following year $ 857,304.00
32
33 Quarterly cash flow
34 Q1 Q2 Q3 Q4 Sales
35 Collections from previous quarter $ 497,700.00 $ 502,740.00 $ 520,524.00 $ 558,828.00 Purchases
36 Collections from current quarter sales 291,060.00 301,356.00 323,532.00 280,764.00 Uses of Cash
37 Payments to suppliers for previous quarter (233,730.00) (241,998.00) (259,806.00) (225,462.00) Payments of Accounts Payable
38 Payments to suppliers for current quarter (168,942.00) (181,374.00) (157,398.00) (176,223.60) Wages, Taxes, and other expenses
39 Wages, taxes, and other Expense (198,450.00) (205,470.00) (220,590.00) (191,430.00) Capital Expenditures
40 Interest (148,000.00) (148,000.00) (148,000.00) (148,000.00) Long term financing expenses:
41 Capital expenditures (260,000.00) Interest and Dividends
42 Net cash flow $ 39,638.00 $ 27,254.00 $ (201,738.00) $ 98,476.40 Total Uses of Cash
43
44 Cash Budget
45 Q1 Q2 Q3 Q4
46 Beginning cash balance $ 149,500.00 $ 189,138.00 $ 216,392.00 $ 14,654.00
47 Net cash inflow 39,638.00 27,254.00 (201,738.00) 98,476.40
48 Ending cash balance $ 189,138.00 ### $ 216,392.00 $ 14,654.00 $ 113,130.40
49 Minimum cash balance 90,000.00 ### 90,000.00 90,000.00 90,000.00
50 Cumulative surplus (deficit) $ 99,138.00 ### $ 126,392.00 $ (75,346.00) $ 23,130.40
51
52 Short-term Financial Plan
53 Target cash balance $ 90,000.00 ### $ 90,000.00 $ 90,000.00 $ 90,000.00
54 Net cash inflow 39,638.00 27,254.00 (201,738.00) 98,476.40
55 New short-term investments (39,935.50) (27,751.18) - (23,674.03)
56 Income on short-term investments 297.50 497.18 635.93 -
57 Short-term investments sold - - 127,186.68 -
58 New short-term borrowing - - 73,915.39 -
59 Interest on short-term borrowing - - - (886.98)
60 Short-term borrowing repaid - - - (73,915.39)
61 Ending cash balance $ 90,000.00 ### $ 90,000.00 $ 90,000.00 $ 90,000.00
62 Minimum cash balance (90,000.00)### (90,000.00) (90,000.00) (90,000.00)
63 Cumulative surplus (deficit) $ - ### $ - $ - $ -
64
65 Beginning short-term investments $ 59,500.00 $ 99,435.50 $ 127,186.68 $ -
66 Ending short-term investments 99,435.50 127,186.68 - 23,674.03
67 Beginning short-term debt - - - 73,915.39
68 Ending short-term debt $ - $ - $ 73,915.39 $ -
69
70 Q1: Excess funds at start of quarter of $59,500.00 earns $297.50 in income.
71 Q2: Excess funds at start of quarter of $99,435.50 earns $497.18 in income.
72 Q3: Excess funds at start of quarter of $127,186.68 earns $635.93 in income.
73 Q4: Shortage of funds at start of quarter of $73,915.39 costs $886.98 in interest.
74
75 Net cash cost
76 Q1 $ 297.50
77 Q2 497.18
78 Q3 635.93
 A B C D E F G H I J K
79 Q4 (886.98)
80 Cash generated by short-term financing $ 543.63
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Long term
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Interest
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Total Uses
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