Recommend a cash management strategy for the company

Assignment Help Business Management

Reference no: EM131311931

Prepare a cash budget for Precision Machines in Microsoft® Excel®.

Create a 1,225-word strategic analysis and include the following:

Recommend a cash management strategy for the company that will minimize the financing cost and increase the cash flows for the company.
Explain two economic and market forces that will impact the financial plan of this company.

Format your documents consistent with APA guidelines.

Provide original work, accurate work.

University of Phoenix Material

Precision Machines

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.

Attachment:- Cash-budget.rar

Reference no: EM131311931

Questions Cloud

Intensity per unit of area : Sound intensity, known as decibels, d, is calculated using:d = 9.8log IaI is the intensity per unit of area. a is faintest audible sound of the average human ear.

Why reduction of herds will lead to rise in meat price today : Alabama food prices jump in May Alabama Farmers Federation announced that food prices in May will increase. In previous unprofitable years, farmers reduced their herds with the result that in 2009 meat production will fall. Bacon is expected to ri..

Explain who the stakeholders are in health information : Explain who the stakeholders are in health information systems' implementation.Describe the limitations in health information systems' data analysis.Describe the opportunities in health information systems' data analysis.Explain what the literature s..

How did the pax romana foster economic development : Why was the innovation of coinage by the Greeks so important for economic development? How did the Pax Romana foster economic development?

Recommend a cash management strategy for the company : Recommend a cash management strategy for the company that will minimize the financing cost and increase the cash flows for the company.

How much will you have in the account in 35 years : You deposit $500 each month into an account earning 2% interest compounded monthly. a) How much will you have in the account in 35 years?

Determine whether the demand for home heating oil is elastic : When the price of home heating oil increased by 20 percent, the quantity demanded decreased by 2 percent and the quantity of wool sweaters demanded increased by 10 percent. Use this information to work Problems.

Discuss the role of the fomc and the three major policies : Discuss the role of the FOMC and the three major policies it implements to help regulate banks. Briefly describe the equation used to measure bank reserves and the definition of the federal funds rate.

Deposit in an account : How much would you need to deposit in an account now in order to have $4000 in the account in 5 years? Assume the account earns 3% interest compounded monthly?

User Account

All Pages