David wants to invest in $50,000 worth of new equipment for the camps in 2021 He believes it would be possible to improve the average collection period to 30 days. Based on the 2021 projected financial statements, would there be enough cash to internally finance the purchase of this new equipment?

Make sure to show calculations that were used to reach the decision.

2020 2021 0 5,000 0 5,000 5,000 0 0 5,000 2 3 Common shares 4 Balance at beginning of year 5 5 Common shares issued 6 6 Other changes 7 7 Balance at end of year 8 9 Retained earnings 10 Balance at beginning of year 11 Profit applicable to common shareholders 12 Sub-total 13 Dividends paid to shareholders 14 Balance at end of year 15 16 Total shareholders' equity 17 0 41,760 41,760 35,000 6,760 6,760 56,838 63,598 36,750 26,848 11,760 31,848 2020 2021 -NOOOOO 12,000 1,500 13,500 0 12,000 1,500 13,500 2,700 13,500 10,800 9,500 10,000 21,378 18,300 19,500 39,678 33,000 50,478 2 3 Assets 4 Non-current assets 5 Bus 6 Equipment 7 Sub-total 8 Accumulated depreciation/amortization 9 10 Total non-current assets 11 12 Current assets 13 Cash 14 Trade receivables 15 16 Total current assets 17 18 Total assets 19 20 Equity and liabilities 21 Share capital 22 Retained earnings 23 24 Total shareholders equity 25 26 Non-current liabilities 27 Bank Loan (10 year term loan) 28 29 Total Non-current liabilities 30 31 Current liabilities 32 Interest payable 33 Income Tax Payable 34 Other accounts payable 35 36 Total current liabilities 37 38 Total labilities 39 40 Total equity and liabilities 41 5,000 6,760 5,000 26,848 11,760 31,848 10,000 9,000 10,000 9,000 800 10,440 0 1,5201 14,210 0 11,240 15,730 21,240 24,730 33,000 56,578 2 N- 2020 2021 100,000 122,000 0 0 0 0 0 100,000 122,000 3 3 4 5 Revenue 6 7 Cost of sales 8 COGS 9 Total cost of sales 10 11 Gross profit 12 13 Expenses 14 Salaries expense 15 Field rental expense 16 Adminisrative expense 17 Insurance expense 18 Advertising Expense 19 Interest expense 20 Depreciation/amortization 21 Other charges 22 Total expenses 23 24 Profit before taxes 25 26 Income taxe expense 27 28 Profit for the year 20,000 14,000 7,000 6,000 0 23,000 14,182 7,350 0 3,000 720 2,700 0 50,952 800 0 0 47,800 52,200 71,048 10,4401 14,2101 41,760 56,838 20 2020 2021 0 5,000 0 5,000 5,000 0 0 5,000 2 3 Common shares 4 Balance at beginning of year 5 5 Common shares issued 6 6 Other changes 7 7 Balance at end of year 8 9 Retained earnings 10 Balance at beginning of year 11 Profit applicable to common shareholders 12 Sub-total 13 Dividends paid to shareholders 14 Balance at end of year 15 16 Total shareholders' equity 17 0 41,760 41,760 35,000 6,760 6,760 56,838 63,598 36,750 26,848 11,760 31,848 2020 2021 -NOOOOO 12,000 1,500 13,500 0 12,000 1,500 13,500 2,700 13,500 10,800 9,500 10,000 21,378 18,300 19,500 39,678 33,000 50,478 2 3 Assets 4 Non-current assets 5 Bus 6 Equipment 7 Sub-total 8 Accumulated depreciation/amortization 9 10 Total non-current assets 11 12 Current assets 13 Cash 14 Trade receivables 15 16 Total current assets 17 18 Total assets 19 20 Equity and liabilities 21 Share capital 22 Retained earnings 23 24 Total shareholders equity 25 26 Non-current liabilities 27 Bank Loan (10 year term loan) 28 29 Total Non-current liabilities 30 31 Current liabilities 32 Interest payable 33 Income Tax Payable 34 Other accounts payable 35 36 Total current liabilities 37 38 Total labilities 39 40 Total equity and liabilities 41 5,000 6,760 5,000 26,848 11,760 31,848 10,000 9,000 10,000 9,000 800 10,440 0 1,5201 14,210 0 11,240 15,730 21,240 24,730 33,000 56,578 2 N- 2020 2021 100,000 122,000 0 0 0 0 0 100,000 122,000 3 3 4 5 Revenue 6 7 Cost of sales 8 COGS 9 Total cost of sales 10 11 Gross profit 12 13 Expenses 14 Salaries expense 15 Field rental expense 16 Adminisrative expense 17 Insurance expense 18 Advertising Expense 19 Interest expense 20 Depreciation/amortization 21 Other charges 22 Total expenses 23 24 Profit before taxes 25 26 Income taxe expense 27 28 Profit for the year 20,000 14,000 7,000 6,000 0 23,000 14,182 7,350 0 3,000 720 2,700 0 50,952 800 0 0 47,800 52,200 71,048 10,4401 14,2101 41,760 56,838 20