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Question 5 BBT Pte Ltd is a manufacturing company. The sales forecasts for the following quarters are provided below as at 31 December 2019. 2020

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Question 5 BBT Pte Ltd is a manufacturing company. The sales forecasts for the following quarters are provided below as at 31 December 2019. 2020 2021 Figures in S'million Sales Q1 40 Q2 50 Q3 50 Q4 40 Q1 50 BBT collects 60% of revenue in cash within the quarter and the remaining credit sales are collected in the next quarter. Purchases are 50% of the following quarter's sales. 50% of these purchases are settled by cash and the remaining credit purchases are settled in the next quarter. Overheads of $5 million per quarter are paid as incurred. Outstanding trade receivables and trade payables as at 31 December 2019 are $10 million and $8 million respectively. These are expected to be fully collected or settled by the end of Q1 2020. BBT expects to purchase new equipment in Q2 2020 for $20 million. Depreciation expense is $2 million per quarter. BBT will also commence paying quarterly dividends of $10 million beginning from Q3 2020. Cash balance as of 1 January 2020 is $5 million. Prepare and construct a cash budget for Q1 to Q4 of 2020. (16 marks) (b) Mid-way through Q1 2020, a sudden global market event occurs which disrupts BBT's existing business. As a result, the sales team has revised their estimates and highlight that they will only be able to meet 25% of their initial sales forecasts for the rest of the year in 2020, Assess and recommend three (3) options to improve the short-term liquidity situation for BBT (9 marks)

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