1.

Sales forecast	December	January	February	March	April
Cash Sales	12500	15000	10000	20000	20000
Collection of AR:
Lagged 1 Month	6250	7500	5000	10000	10000
Lagged 2 Months	6250	7500	5000	10000	10000
Other Cash Receipts	0	0	0	0	0
Total Cash Receipts	12500	21,250	23,750	32,500	35,000

2.

Sales	December	January	February	March	April
Purchases (50% of	15000	10000	20000	20000	15000
next month's sales
Current month 0.20	3000	2000	4000	4000	3000
1 month lag 0.80	12000	8000	16000	16000	12000
Rent payments	1500	1500	1500	1500	1500
Wages/Salaries	5000	5000	5000	5000	5000
Total	24,500	30,500	38,500	46,500	40,500

3.

	December	January	February	March	April
February Cash Balance			1500	-13250	-27250
Total Cash Receipts			23750	32500	35000
Cash Disbursements			38500	46500	40500
Balance		1500	-13250	-27250	-32750
Balance from Feb-April

4. Define cash inflows and cash outflows

5. If I have a budget where expected gross receipts are what is obtained in #1 and my expected cash disbursements are what is obtained in #2. What can you tell me about the cash balance (obtained in #3) if you were doing a variance analysis?

6. What is a cash budget, a flexible budget, CAPEX, and OPEX?

7. How often do you use some form of budgeting? Why?

8. In the business world we have meetings where the departments who did not meet their monthly forecast come and explain their variances. If this is common practice why is forecasting/budgeting so important?