Solve for Budgeted Net Cashflow Given; Sales are broken into 10% Cash, 90% A/R.
A/R Collections: 50% the same month of sale, 30% following month of sale, 14% a second month from the sale, 6% never collected.
Bad Debt Expense recognized at the time of sale.
Monthly purchases are comprised of 80% for this month’s sales and 20% for next month’s sales.
No inventory on hand at the start of January, 100% of inventory must be purchased plus 20% of February’s sales.
60% of payments happen during the month of purchase, 40% the following month.
Deprecation is 40% of Fixed Facilities Cost. All other fixed facilities costs and all the Selling General and Administration (SG&) fixed costs are cash expenses and are paid on June 30 for the entire year.
$1,000,000 Start-up Funding, access to a line of credit. The line of credit has an annual interest rate of 12%. The Bank requires a minimum cash balance of $1,000,000. Interest on the outstanding line of credit balance is due and paid on the first day of each month.
| January | February | March | April | May | June | July | Aug | Sep | Oct | Nov | Dec | |
| Unit Sales | 509,000 | 497,000 | 512,000 | 496,000 | 514,000 | 511,000 | 487,000 | 511,000 | 490,000 | 503,000 | 513,000 | 499,000 |
| Price | $152.00 | $152.00 | $152.00 | $151.00 | $152.00 | $151.00 | $149.00 | $149.00 | $153.00 | $153.00 | $153.00 | $152.00 |
| Purchase Cost | 63.9 | 65.9 | 66 | 64.3 | 64.3 | 65.7 | 66.4 | 66.8 | 65.2 | 62 | 66 | 65.5 |
| Fixed Cost | ||||||||||||
| – Facilities | $10,800,000 | $11,800,000 | $11,600,000 | $11,300,000 | $11,600,000 | $11,400,000 | $12,000,000 | $10,800,000 | $10,800,000 | $11,700,000 | $11,900,000 | $10,600,000 |
| – Selling, General, and Administrative | 16,000,000 | 16,900,000 | 16,900,000 | 16,100,000 | 17,000,000 | 16,200,000 | 16,700,000 | 16,700,000 | 16,400,000 | 16,800,000 | 16,200,000 | 16,900,000 |
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