You have recently been hired by Keafer Manufacturing to work in its newly established treasury department. Keafer Manufacturing is a small company that produces highly customized cardboard boxes in a variety of sizes for different purchases. Adam Keafer, the owner of the company, works primarily in the sales and production areas of the company. Currently, the company basically puts all receivables in one pile and all payable in another, and a part$-$time bookkeeper periodically comes in and attacks the piles. Because of this disorganized system, the finance area needs work, and that is what you have been brought in to do$.$

The company currently has a cash balance of $$170,000,$ and it plans to purchase new machinery in the third quarter at a cost of $$325,000.$ The purchase of the machinery will be made with cash because of the discount offered for a cash purchase. Adam wants to maintain a minimum cash balance of $$130,000$ to guard against unforeseen contingencies. All of keafer$$s sales to customers and purchases from suppliers are made with credit.

The company currently had the following sales each quarter of the year just ended:

Q$1$

Q$2$

Q$3$

Q$4$

Gross sales

$$893,000$

$$924,000$

$$996,000$

$$858,000$

After some research and discussion with customers, you are projecting that sales will be $8$ percent higher in each quarter next year $($for example, next year's Q$2$ would be $8\%$ higher than this year's Q$2).$ Sale for the first quarter of the following is also expected to grow at $8$ percent.

You calculate that Keafer currently has DSO of $57$ days and an accounts receivable balance of $$683,000.$ However, $10$ percent of account receivable balance is from a company that has just entered bankruptcy, and it is likely that this portion will never be collected.

You have also calculated that Keafer typically orders supplies each quarter in the amount of $50$ percent of the next quarter$$s projected gross sales, and suppliers are paid in $53$ days, on average. Wages, taxes, and other costs run about $25$ percent of gross sales. depreciation charges will be $$36,000$ a month. The company has a quarterly interest payment of $$190,000$ on its long$-$term debt. Finally the company uses a local bank for its short$-$term financial needs. It currently pays $1\mathrm{.}2$ percent per quarter on all short$-$term borrowing and maintains a money market account that pays $0\mathrm{.}5$ percent per quarter on all short$-$term deposits.

Adam has asked you to prepare a cash budget and short$-$term financial plan for the company under the current policies. He has also asked you to prepare additional plans based on changes in several inputs.

Use the numbers given to complete the cash budget and short$-$term financial plan for Q$1$ to Q$4.$

Rework the cash budget and short$-$term financial plan assuming Keafer changes to a minimum cash balance of $$100,000.$

Rework the sales budgeting assuming an $11$ percent growth rate in sales. Assume a $$100,000$ target cash balance.

You have looked at competitor$$s trading credit policies and have determined that the industry standard credit policy is $1/10$ net $45.$ You want to examine how a switch to this credit policy would affect your cash budget and short$-$term financial plan. If this credit policy is implemented, you estimate that $25$ percent of all customers will take advantage of it$,$ and the DSO will decline to $38$ days. Rework the cash budget and short$-$term financial plan under the new credit policy and a minimum cash balance of $$100,000.$ What interest rate is implied by the credit terms?

You have talked to the company$$s main supplier about the credit term Keafer receives. The supplier has stated that it would be willing to offer new credit terms of $2/15,$ net $53.$ Rework the cash budget and short$-$term financial plan assuming $(1)$ original sale numbers $(2)$ you take the credit terms on all orders, and $(3)$ the minimum cash balance of $$100,000.$ Create the full ex cel model with formulas