Precision Machines is preparing a financial plan for the next six months to determine the financial needs of the company. The historical analysis of the companys sales shows that the companys total sales are 30% cash sales and 70% credit sales. Further analysis of credit sales shows that the company receives 50% of the credit sales one month after the sale and the remaining 50% in the second month after the sale. This means the cash collections from sales are 30% in the first month of the sale, 35% in the second month, and 35% in the third month.

The materials purchased by the company amounts to 50% of the sales for the month. The company pays for the purchases one month after the initial purchase. The company likes to maintain a cash balance of $5,000. The cost of borrowing is 10%. The company plans to pay off the loan whenever there is a surplus and borrow when there is a deficit.

The attached spreadsheet shows revenues (sales), expenses, capital expenditures, and other expenses for Precision Machines next six months. Using the information given on the spreadsheet, prepare a cash budget for January through June and determine the cash surplus, deficit, and the financing needs of the company.

Prepare a cash budget for Precision Machines in Microsoft Excel

Data:
		November	December	January	February	March	April	May	June
Annual Cost of borrowing	10.00%
Minimum Cash Balance	$5,000.00
Beginning Cash Balance	$7,500.00
Revenues (Sales)		$40,000.00	$50,000.00	$48,000.00	$55,000.00	$35,000.00	$50,000.00	$65,000.00	$40,000.00
Cash Collections		November	December	January	February	March	April	May	June
First Month (30%)
Second Month (35%)
Third Month (35%)
Total Collections
Cash Disbursements
Material Purchases
Salaries				6,000.00	6,000.00	6,000.00	6,000.00	6,000.00	6,000.00
Wages				3,000.00	3,500.00	3,000.00	3,200.00	3,500.00	3,000.00
Other Expenses
Capital Expenditure						45,000.00
Dividends						1,000.00			1,000.00
Interest
Total Disbursements
Cash flows
Net cash flows
Cumulative cash flows
Minimum Cash Balance
Cash Surplus or (Deficit)
Recommendations: Create a 1,400 to 1,500 word strategic analysis and include the following (BASED on the cash flow worksheet developed): Recommend a cash management strategy for the company that will minimize the financing cost and increase the cash flows for the company. Explain two economic and market forces that will impact the financial plan of this company.