Jackson Automotive Systems produces automotive parts for advanced heating and air conditioning systems, engine cooling systems, fuel injection and transfer systems, and various other engine parts and it supplies them to the automotive industry primarily in Michigan. Like many OEM suppliers for the automotive industry, Jackson cut back production following the financial crisis in 2008. By 2013, the firm is back to operating at capacity. The company experiences a bottleneck in production of some key electronic components and, as a result, is unable to repay its outstanding debt to the bank. In addition, the firm delayed replacing equipment during the downturn and now must replace aging equipment to avoid future production delays. The president approaches the bank for an extension to repay a loan and for an additional loan to cover the new equipment purchase. Before meeting with the loan committee, the president must prepare a presentation on the firm's financial position Brief Cases from Haevard Business School JACKSON AUTOMOTIVE

Cash Budget Format

June

July

August

September

October

Projected Sales

$ 12,681.00

$ 7,374.00

$ 7,201.00

$ 7,394.00

Beginning Cash Balance

$ 4,994

This was given in the Balance Sheet--May 2013 cash balance

Cash Receipts:

Collection of Accounts Receivable

Sales are collected in the following month.

Interest Income

2% of the cash balance

Bank Loan

Amount borrowed

Total Cash Inflow

Total of cash inflows

Cash Disbursements

Payments of Accounts Payable

Payable in the month followng the purchase.

Operating Expenses

Given at 750 per month

Capital Expenditures

Purchase new equipment in July

Tax Payments

Quarterly--paid in June and September

Interest Payments

6% of outstanding loan

Principal Payments

Due in September for both loan

Dividend Payments

Paid in September

Total Cash Outflow

Total of cash disbursements

Net Cash Inflow (outflow)

Difference between cash inflows minus cash outflows

Ending Cash Balance

Beginning cash + net cash inflow