Multiple cash budgetsScenario analysis Brownstein, Inc., expects sales of $96,000 during each of the next 3 months. It will make monthly purchases of $55,000 during this time. Wages and salaries are $13,000 per month plus 4% of sales. Brownstein expects to make a tax payment of $25,000 in the next month and a $11,000 purchase of fixed assets in the second month and to receive $8,000 in cash from the sale of an asset in the third month. All sales and purchases are for cash. Beginning cash and the minimum cash balance are assumed to be zero. a. Construct a cash budget for the next 3 months. b. Brownstein is unsure of the sales levels, but all other figures are certain. If the most pessimistic sales figure is $76,000 per month and the most optimistic is $115,000 per month, what are the monthly minimum and maximum ending cash balances that the firm can expect for each of the 1-month periods? c. Briefly discuss how the financial manager can use the data in parts a. and b. to plan for financing needs. a. Construct a cash budget for the next 3 months. Complete the Brownstein, Inc.'s cash budget for the 1st month below: (Round to the nearest $000.) Brownstein, Inc. Cash Budget ($000) Most likely scenario 1st Month 96000 Sales $ Sale of asset $ 0 Purchases $ 55000 Wages and salaries $ 16840 Taxes $ 25000 Purchase of fixed asset $ 0 Net cash flow $ -840 $ 0 Add: Beginning cash Ending cash $ -840 Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $3,760,000 loan, to assess the firm's financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industry averages and Creek's recent financial statements, evaluate and recommend appropriate action on the loan request. Creek Enterprises Income Statement : Industry averages Debt ratio Times interest earned ratio Fixed-payment coverage ratio 0.48 7.28 1.95 Creek Enterprises Balance Sheet: ... Creek Enterprises's debt ratio is 0.73. (Round to two decimal places.) Creek Enterprises's times interest earned ratio is 2.90. (Round to two decimal places.) Creek Enterprises's fixed-payment coverage ratio is (Round to two decimal places.) Data table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Creek Enterprises Income Statement for the Year Ended December 31, 2019 Sales revenue $29,957,000 Less: Cost of goods sold 20,964,000 Gross profits $8,993,000 Less: Operating expenses Selling expense $2,997,000 General and administrative expenses 1,801,000 Lease expense 197,000 Depreciation expense 965,000 Total operating expense 5,960,000 Operating profits $3,033,000 Less: Interest expense 1,046,000 Net profits before taxes $1,987,000 Less: Taxes (rate = 21%) 417,270 Net profits after taxes $1,569,730 Less: Preferred stock dividends 112,500 Earnings available for common stockholders $1,457,230 Print Done Data table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Creek Enterprises Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity Current assets Current liabilities Cash $956,000 Accounts payable $7,980,000 Marketable securities 3,005,000 Notes payable 7,997,000 Accounts receivable 11,982,000 Accruals 518,000 Inventories 7,521,000 Total current liabilities $16,495,000 Total current assets $23,464,000 Long-term debt (includes financial leases)** $19,855,000 Gross fixed assets (at cost)" Stockholders' equity Land and buildings $10,974,000 Preferred stock (25,000 shares, $4.50 dividend) $2,550,000 Machinery and equipment 20,505,000 Common stock (1.11 million Furniture and fixtures 7,960,000 shares at $4.50 par) 4,995,000 Gross fixed assets $39,439,000 Paid-in capital in excess of par value 3,981,000 Less: Accumulated depreciation 13,042,000 Retained earnings 1,985,000 Net fixed assets $26,397,000 Total stockholders' equity $13,511,000 Total liabilities and Total assets $49,861,000 stockholders' equity $49,861,000 "The firm has a 4-year financial lease requiring annual beginning-of-year payments of $197,000. Three years of the lease have yet to run. **Required annual principal payments are $843,000