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| a | Using the information provided, construct a monthly cash budget for October through December 2011. Based on your analysis, will Noble enjoy a surfeit of cash, or require external financing? |
| b | Construct a pro forma income statement for the first fiscal quarter of 2012 and a pro forma balance sheet as of December 31, 2011. What is your estimated external financing required for December 31? |
| c | Does the December 31, 2011, estimated external financing equal your cash surplus (deficit) for this date from your cash budget? |
| d | Based on your answers above, construct a cash flow forecast for Noble for the period October through December 2011. |
| Noble Selected Information and Financial Statements |
| | Sales (20 percent for cash, the rest on 30-day credit terms): |
| | 2011 Actual | | | 2011Projected |
| | July | August | September | October | November | December |
| | 76,000 | 88,000 | 266,000 | 125,000 | 51,000 | 53,000 |
| | Purchases (all on 60-day terms): |
| | 2011 Actual | | | 2011 Projected |
| | July | August | September | October | November | December |
| | 116,000 | 122,000 | 257,000 | 62,000 | 27,000 | 26,000 |
| Salaries payable monthly | | | | 20,000 |
| Principal payment on debt due in December | | | | 25,700 |
| Interest due in December | | | | 9,000 |
| Dividend payable in December | | | | 15,000 |
| Taxes payable in November | | | | 19,000 |
| Addition to accumulated depreciation in December | | | | 4,000 |
| Cash balance on October 1, 2011 | | | | 35,000 |
| Minimum desired cash balance | | | | 15,000 |
| Noble’s annual income statement and balance sheet for September 30, 2011 appear below. |
| Additional information about the company's accounting methods and expectations for |
| the last three months of 2011 appear in the footnotes. |
| | | Noble |
| | | Annual Income Statement |
| | | Fiscal Year ended September 30, 2011 ($ 000) |
| Net sales | | | 1,581.6 |
| Cost of goods sold1 | | | 1,098.0 |
| Gross profits | | | 483.6 |
| Selling and administrative expenses2 | | | 240.0 |
| Interest expense | | | 18.0 |
| Depreciation3 | | | 16.0 |
| Net profit before tax | | | 209.6 |
| Tax at 33% | | | 69.2 |
| Net profit after tax | | | 140.4 |
| | | Noble |
| | | Balance Sheet |
| | | September 30, 2011 ($ 000) |
| Assets |
| Cash | | | 34.0 |
| Accounts receivable | | | 212.8 |
| Inventory | | | 425.0 |
| Total current assets | | | 671.8 |
| Gross fixed assets | | | 135.0 |
| Accumulated depreciation | | | 52.0 |
| Net fixed assets | | | 83.0 |
| Total assets | | | 754.8 |
| Liabilities |
| Bank loan | | | 0.0 |
| Accounts payable | | | 379.0 |
| Accrued expenses4 | | | 55.0 |
| Current portion long-term debt5 | | | 25.7 |
| Taxes payable | | | 56.0 |
| Total current liabilities | | | 515.7 |
| Long-term debt | | | 120.0 |
| Shareholders' equity | | | 119.1 |
| Total liabilities and equity | | | 754.8 |
| 1. Cost of goods sold consists entirely of items purchased during the quarter. |
| 2. Selling and administrative expenses consist entirely of salaries. |
| 3. Depreciation is straight-line at the rate of $4,000 per quarter. |
| 4. Accrued expenses are not expected to change in the last quarter. |
| 5. $25.7 due December 2011. No payments for remainder of year. |
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c3_problem.xls
