Balance Sheet and Break Even analysis:
Cash Flow Budget (by quarter only) Cash Balance, Beginning Cash Receipts Collections on Sales Investenent Reverue Cash Available for Operations Cash Disbursaments: Disbursements on Purchases Shipping Sales Commissians Wages/Salaries Rent Other Adrrinistrative Interest Expense Taxas Cesh ExcessiDeficiency (Purchase),Sell Marketable Securities (round to nearest $1000 BorrowN(Repay) ST Loens (roundad to nearest $1000 ) Cash Balance, Ending (or Minimum Cash Balance 10395 Incame Staiement (by quarter and year) Opersting Incame (EBIT) Investmant Income f (Interest Expense) Earnings Before Taxes (EBT) Taxes (34\%) Net Income (EAT) 14942 Belance Sheet (as of 12/31 only) Cesh Markntable Securitios Interest Receivable Accounts Recelvable Inventary Equipment, Net of Accumulated Depreciation 86125 Tolal Assets Accounts Payable Short-Term Financing (loars) Interest Payable Taxas Payable Common Slock. Retained Earings Total Liabilities + Equity + Base Scenario Offer Cash Discounts New Prices SCENARIO W1: BASE CASE The following planning assumptions should be used in your BASE CASE BUDGET SCENARIO. Produet Listing/Sales Forecast Assumptions Assumptions for Cash Collections from Customers - Customers pay 40% in cash, 60% credit; All credit sales are collected in following quarter - Uncollectible accounts are negligible and thus ignored Planned Inventory Levelsinventory Costs Assumptions - At the end of each quarter, Small Company wants to have on hand an inventory of items valued at 15% of the expected sales for the following quarter Assumptions for Cash Disbursements for Purchases - Purchases are 70% in cash, 30% credit; All credit purchases are paid for in the following quarter - The company does not currently receive favorable terms from its suppliers; therefore, no discounts are taken Operating Budget (through EBTT) Assumptions Ooher Cash Flow Assumptions - Maintain a minimum cash balance of $10,000 at end of each quarter - Use short-term loans to meet cash needs and to meet minimum cash balance; invest in short term marketable securities with excess cash so as not to exceed minimum cash balance - Borrow no more cash than necessary; repay as promptly as possible - Borrow/Repay loans or Invest/Sell securities in inerements of $1,000 - Borrowing/Repayments occur at the beginning of each quarter in question; Investing/Selling securities occurs at the beginning of each quarter in question - Acerue simple iaterest at the ead of each quarter on outstanding loan balances; interest is paid in the following quarter; 8% annual rate (or 2% each quarter) - Acerue simple interest at the ead of each quarter on securities held; interest is received in the following quarter; 4% annual rate (or 1% each quarter) - Accrue taxes at 34% on Earnings Before Taxes (EBT); Acerued taxes are remitted to governing bodies in the following quarter; for quarters with negative EBT, assume no taxes Prior Year (12/31/Year 1) Balance Sheet Balance Sheet Assumptions - Assume that there is no additional equity contributed during Year 2; as such, the company will only increase the equity account via earned capital (i.e., retained earnings) Break-even Assumptions - Calculate a sales mix based on units - Assume wages, rent, other administrative expenses, and depreciation are fixed costs; assume cost of goods sold, sales commissions, and shipping are variable costs Cash Flow Budget (by quarter only) Cash Balance, Beginning Cash Receipts Collections on Sales Investenent Reverue Cash Available for Operations Cash Disbursaments: Disbursements on Purchases Shipping Sales Commissians Wages/Salaries Rent Other Adrrinistrative Interest Expense Taxas Cesh ExcessiDeficiency (Purchase),Sell Marketable Securities (round to nearest $1000 BorrowN(Repay) ST Loens (roundad to nearest $1000 ) Cash Balance, Ending (or Minimum Cash Balance 10395 Incame Staiement (by quarter and year) Opersting Incame (EBIT) Investmant Income f (Interest Expense) Earnings Before Taxes (EBT) Taxes (34\%) Net Income (EAT) 14942 Belance Sheet (as of 12/31 only) Cesh Markntable Securitios Interest Receivable Accounts Recelvable Inventary Equipment, Net of Accumulated Depreciation 86125 Tolal Assets Accounts Payable Short-Term Financing (loars) Interest Payable Taxas Payable Common Slock. Retained Earings Total Liabilities + Equity + Base Scenario Offer Cash Discounts New Prices SCENARIO W1: BASE CASE The following planning assumptions should be used in your BASE CASE BUDGET SCENARIO. Produet Listing/Sales Forecast Assumptions Assumptions for Cash Collections from Customers - Customers pay 40% in cash, 60% credit; All credit sales are collected in following quarter - Uncollectible accounts are negligible and thus ignored Planned Inventory Levelsinventory Costs Assumptions - At the end of each quarter, Small Company wants to have on hand an inventory of items valued at 15% of the expected sales for the following quarter Assumptions for Cash Disbursements for Purchases - Purchases are 70% in cash, 30% credit; All credit purchases are paid for in the following quarter - The company does not currently receive favorable terms from its suppliers; therefore, no discounts are taken Operating Budget (through EBTT) Assumptions Ooher Cash Flow Assumptions - Maintain a minimum cash balance of $10,000 at end of each quarter - Use short-term loans to meet cash needs and to meet minimum cash balance; invest in short term marketable securities with excess cash so as not to exceed minimum cash balance - Borrow no more cash than necessary; repay as promptly as possible - Borrow/Repay loans or Invest/Sell securities in inerements of $1,000 - Borrowing/Repayments occur at the beginning of each quarter in question; Investing/Selling securities occurs at the beginning of each quarter in question - Acerue simple iaterest at the ead of each quarter on outstanding loan balances; interest is paid in the following quarter; 8% annual rate (or 2% each quarter) - Acerue simple interest at the ead of each quarter on securities held; interest is received in the following quarter; 4% annual rate (or 1% each quarter) - Accrue taxes at 34% on Earnings Before Taxes (EBT); Acerued taxes are remitted to governing bodies in the following quarter; for quarters with negative EBT, assume no taxes Prior Year (12/31/Year 1) Balance Sheet Balance Sheet Assumptions - Assume that there is no additional equity contributed during Year 2; as such, the company will only increase the equity account via earned capital (i.e., retained earnings) Break-even Assumptions - Calculate a sales mix based on units - Assume wages, rent, other administrative expenses, and depreciation are fixed costs; assume cost of goods sold, sales commissions, and shipping are variable costs
