In this assignment, I will be evaluating a cash budgeting scenario and developing a financial plan for a fictional business.

Kent Resom, a recent graduate with huge potential, has accepted a position as an entry-level analyst with Builders R Us Manufacturing Company. The president of the company, U. R. Wright, has requested Kent to provide him with a cash flow analysis for the period of April 30 to June 30, which happens to be the end of the current fiscal year. The following information is available:

All sales are credit sales, with 20% of sales collected in the month of sales, 60% collected in the month following sales, 15% collected in the second month following the sale, and the remaining 5% written off as bad debt losses in the sixth month following the sale. Raw materials purchased each month are 75% of the next months sales. Payment for raw materials is made during the month after the purchase. The company is required to maintain a minimum balance of $5,000 in the checking account, and the balance on April 1^st is $6,000. Rent, insurance, and other expenses are $1,000 per month.

Sales and wage data are as follows:

ACTUAL

	Sales	Wages
February	$ 30,000	$ 3,000
March	$ 30,000	$ 3,000

ESTIMATED

	Sales	Wages
April	$ 30,000	$ 3,000
May	$ 40,000	$ 4,000
June	$ 50,000	$ 5,000
July	$ 60,000	$ 6,000
August	$ 50,000	$ 5,000
September	$ 40,000	$ 4,000

Prepare a cash budget for the period April 30 through June 30. For any month during which a cash shortage is indicated, assume that the Friendly Online National Bank will make funds available. Use the budget worksheet provided to solve the problem.

Write a 700- to 1,050-word financial plan in which you complete the following:

Discuss potential cash budget benefits and pitfalls for the business, including how the budget supports the strategic goal of the business to increase revenue by 10% annually.

Outline your expected business expenses (e.g. fixed and variable costs, marketing, labor, operations, insurance) and sources of revenue (e.g. funding, sales of products/services).

Include an income statement, balance sheet, and cash flow statement.

Explain how you will adjust your small business cash budget to manage contingencies (such as emergencies and market shifts) as well as product and distribution shifts.

Compare the differences between a cash budget and an operating budget, and explain why both are beneficial.

Explain why a budget variance analysis is crucial for the operation of a business, and discuss how often a budget variance analysis should be performed.

Summarize your findings/recommendations.