Reference no: EM133121449
Question - Start with the partial model in the file attached. Marvel Pence, CEO of Marvel's Renovations, a custom building and repair company, is preparing documentation for a line of credit request from his commercial banker. Among the required documents is a detailed sales forecast for parts of 2020 and 2021:
|
Sales
|
Labor and Raw Materials
|
May, 2020
|
$75,000
|
$80,000
|
June, 2020
|
$115,000
|
$75,000
|
July, 2020
|
$145,000
|
$105,000
|
August, 2020
|
$125,000
|
$85,000
|
September, 2020
|
$120,000
|
$65,000
|
October, 2020
|
$95,000
|
$70,000
|
November, 2020
|
$75,000
|
$30,000
|
December, 2020
|
$55,000
|
$35,000
|
January, 2021
|
$45,000
|
N/A
|
Estimates obtained from the credit and collection department are as follows: collections within the month of sale, 20%; collections during the month following the sale, 60%; collections the second month following the sale, 25%. Payments for labor and raw materials are typically made during the month following the one in which these costs were incurred. Total costs for labor and raw materials are estimated for each month as shown in the table. General and administrative salaries will amount to approximately $25,000 a month; lease payments under long-term lease contracts will be $7,000 a month; depreciation charges will be $8,000 a month; miscellaneous expenses will be $5,000 a month; income tax payments of $30,000 will be due in both August and December; and a progress payment of $95,000 on a new office suite must be paid in October. Cash on hand on July 1 will amount to $70,000, and a minimum cash balance of $30,000 will be maintained throughout the cash budget period.
1. Prepare a monthly cash budget for the last 6 months of 2020.
2. Prepare an estimate of the required financing (or excess funds)-that is, the amount of money Marvel's Renovations will need to borrow (or will have available to invest)-for each month during that period.
3. Would the cash budget be accurate if inflows came in all during the month, but outflows were bunched early in the month?
Prepare a partial income statement
: Prepare a partial income statement for 2021 beginning with income from continuing operations. Ignore EPS disclosures
|
What is the present value of the receivables
: You are expecting to receive $100,000 at the end of year 3 and another $100,000 at the end of year 6. What is the present value of the receivables if the intere
|
What is the hedge fund return on strategy
: A hedge fund believes that Starbucks is going to outperform Dunkin Donuts (another coffee/donut shop, based out of Boston). They decide to engage in a market-ne
|
What is the cost of debt
: Assume that a firm has an outstanding 30-year semi-annual coupon bond with a face value of $1,000 and an annual coupon rate of 14%.
|
Would the cash budget be accurate
: Would the cash budget be accurate if inflows came in all during the month, but outflows were bunched early in the month
|
What is the npv of this investment the cost of capital
: Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.93 million.
|
Describe four ways that option pricing can be used
: During the presentation, one board member, Brittany Waite asked the following questions:
|
Prepare trim and perm income statement for the year
: The company's selling, general, and administrative expenses totalled $6, 155,000 for the year. Prepare Trim and Perm's income statement for the year
|
Determine the companys ratio of fixed assets
: Determine the company's (a) ratio of fixed assets to long-term liabilities and (b) ratio of liabilities to stockholders' equity
|