Reference no: EM132041919
Cash Flow Budgeting - Company A is experiencing rapid growth due to the popularity of its recent hardware release. Current sales of $100,000, which increased from $80,000 the previous month, are expected to grow at a 30% rate. Cost of sales are stable 70% of sales revene, yielding a 30% gross profit. Company A sales are 15% for cash with the remaining 85% collected the following month. Inventory-on-hand is maintained at a level to support the following month's sales. Inventory is paid for at the time of receipt. Company A began the period with a cash balance of $65,000.
(a) For the current month and following three months, determine Company A's: (INCLUDE FORMULAS USED TO SOLVE PROBLEM)
- Revenue
- Cost of sales
- Gross profit
- Accounts receivable
- Inventory
- Cash collections
- Cash disbursements
(b) Is Company A gross profit increasing or declining?
(c) Is Company A cash flow increasing or declining?
(d) What is Company A cash balance at the end of the four-month period?
Cash Flow Budgeting - Company B is experiencing rapid growth due to the popularity of its recent clothing line release. Current sales of $250,000, which increased from $190,000 the previous month, are expected to grow at a 20% rate. Cost of sales are a stable 35% of sales revenue, yielding a 65% gross profit. Company B sales are 30% for cash with the remaining 70% collected the following month. Inventory-on-hand is maintained at a level to support the following two months' sales. Inventory is paid for at the time of receipt. Company B began the period with a cash balance fo $70,000.
(e) For the current month and following three months, determine Company B: (INCLUDE FORMULAS USED TO SOLVE PROBLEMS)
- Revenue
- Cost of sales
- Gross profit
- Accounts receivable
- Inventory
- Cash collections
- Cash disbursements
(f) Is Company B gross profit increasing or declining?
(g) Is Company B cash flow increasing or declining?
(h) What is Company B cash balance at the end of the four-month period?