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3. Fill in the blanks of Table 1: Monthly Cash Outflows and Table 2: Monthly Cash Inflows. Then, use the information to generate Table3: Pro-Forma
3. Fill in the blanks of Table 1: Monthly Cash Outflows and Table 2: Monthly Cash Inflows. Then, use the information to generate Table3: Pro-Forma Cash Flow Budget and answer the following questions. (10 points in total) Table 1: AgBiz Estimated Monthly Cash Outflows (Jan.-Apr.) < e + Item Jan Feb Mar Apre Sales $8,000 $7,000 Purchases($) $1,500 $4,000 $5,000 Payment of $7,000 $4,000 Account Payable Payment of $1,000 $1,000 $1,000 $1,000 Overhead Total Cash Outflows Inventory Levels $5,000 Assumptions: 1. The inventory turnover rate is 12. 2. Inventory is equal to current month's purchases+previous month's purchases 3. Cost of goods sold=25% of sales 4. Account payable turnover ratio=6. < 2 Apr Table 2: AgBiz Estimated Cash Inflows (Jan. - Apr.) < Jan $8,000 Item Sales Cash Sales ($) Account Receivable < (1 month old) Account Receivable < (3 month old) Total Cash Inflows $4,000 < Feb 7 Mar $7,000 $1,750 $2,000 $2,000 $1,000 Assumptions: 1. Sales are 1/4 cash, and 3/4 credits. < 2. Account Receivable ratio is 4.4 2 2 Table 3: Pro-Forma Cash Flow Budget Iteme Jan Feb Initial Cash Balance $1,000 $1,000 Mar $1,000 Apr $1,000 Cash Inflowe Total cash available Cash Outflow Net Cash t t t t Need Borrowings e End Cash Balance < $1,000 $1,000 $1,000 Cumulative borrowings e (Hint: These three tables are consistent. You are able to get cash inflow from table 2 and cash outflow from table 3)++ Based on the above Pro-Forma Cash Flow Budget, answer the following two questions: < t (1) Does the business need to borrow money? If yes, how much money needs to be borrowed? (2) When does the money need to be borrowed? When will the loan be repaid
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