Cash Flow Practical Application LU 3 small business

ASSUMPTIONS TO THE 12 MONTH CASH FLOW BUDGET

James Confectioners

Assume the activity and operating ratios from the financial analysis worksheet.

Make the following assumptions to projected cash flow:

Beginning Cash on hand for January 1st: $161,254

CASH RECEIPTS

SALES: Total Sales are projected growing 10% from $3,897,564. Sales are seasonal with 10% coming in January-March, 35% in April-June, 10% in July-September, and 45% in October-December

SALES PATTERN: 85% on credit and 15% in cash

A/R COLLECTIONS: 15% in the same month as the sale

45% in the first month after the sale

35% in the second month after the sale

5% never collected

LOANS/OTHER CASH INJECTIONS: As necessary per cash over/under

CASH PAID OUT

INVENTORY PURCHASES: $2,907,313 which is a 14% increase over last year. (assume monthly purchases equal $242,276 per month. Further assume that you always take the 2% discount)

UTILITIES: $163,698 (assume 10% increase)

ADVERTISING: $155,903 (assume 5% increase)

INSURANCE: $74,054 (assume 10% increase)

SALARIES & BENEFITS: $381,961 (assume 3% increase)

E-COMMERCE: $38,976 (assume 3% increase)

REPAIRS AND MAINTENANCE: $58,463 (assume 5% increase)

TRAVEL: $23,385 (assume 5% increase)

SUPPLIES: $15,590 (assume 10% increase)

INTEREST: $ 119,658 (assume constant)

MISCELLANEOUS: $1,248 (assume constant)

LOAN PRINCIPAL REPAY: $83,760 (assume constant)