Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 30 Dec 2017 My Price 10.00

Piepkorn Manufacturing

You have recently been hired by Piepkorn Manufacturing to work in its newly established treasury department. Piepkorn Manufacturing is a small company that produces cardboard boxes in a variety of sizes. Gary Piepkorn, the owner of the company, works primarily in the sales and production areas. Currently, the company puts all receivables in one shoe box and all payables in another. Because of the disorganized system, the finance area needs work, and that's what you've been brought in to do.

The company currently has a cash balance of $154,000 and plans to purchase new box folding machinery in the fourth quarter at a cost of $260,000. The purchase of the machinery will be made with cash because of the discount offered. The company's policy is to maintain a target cash balance of $100,000. All sales and all purchases are made on credit.

Gary Piepkorn has projected the following gross sales for each of the next four quarters:

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Gross sales for the first quarter of next year are projected at $825,000.

Piepkorn typically orders 50 percent of next quarter's projected gross sales in the current quarter, and suppliers are typically paid in 53 days. Wages, taxes, and other costs run about 30 percent of gross sales. The company has a quarterly interest payment of $115,000 on its long-term debt.

The company uses a local bank for its short-term financial needs. It pays 1.5 percent per quarter on all short-term borrowing and maintains a money market account that pays 1 percent per quarter on all short-term deposits.

Gary has asked you to prepare a cash budget and short-term financial plan for the company under the current policies. He has also asked you to prepare additional plans based on changes in several inputs.
QUESTIONS

Use the numbers given to complete the cash budget and short-term financial plan.

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I was able to do the cash budget. I could not figure out the rest. below is my work so far...

Cash Flow:        
  Quarter 1 Quarter 2 Quarter 3 Quarter 4
Sales          785,000.00        835,000.00        905,000.00        840,000.00
Sales Collection        231,138.89        245,861.11        266,472.22        247,333.33
Suppliers pd        171,638.89        161,361.11        171,638.89        186,027.78
Expenses        235,500.00        250,500.00        271,500.00        252,000.00
Dividends        
Interest      (115,000.00)      (115,000.00)      (115,000.00)      (115,000.00)
Capital Outlays            (260,000.00)
Total Cash Flow           31,722.22          62,277.78          80,388.89      (220,361.11)
         
Cash Budget        
         
Beginning        
Cash Balance        154,000.00        185,722.22        248,000.00        328,388.89
Net Cash Inflow           31,722.22          62,277.78          80,388.89      (220,361.11)
Ending Cash Balance        185,722.22        248,000.00        328,388.89        108,027.78
Minimum Cash Balance        100,000.00        100,000.00        100,000.00        100,000.00
Cummulative surplus           85,722.22        148,000.00        228,388.89             8,027.78
(deficit)    

 

Answers

Maurice Tutor
(5)
Status NEW Posted 30 Dec 2017 10:12 PM My Price 10.00

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