# Project #156917 - Cash Flow

 Subject Business Due By (Pacific Time) 12/02/2016 07:00 pm

Week 4:

Power Points for Chapters 13-16

Read Lectures – found in Course Materials Week 4.

Activities:

Week Four Case #2:  (Show ALL work)  Submit in APA format

Cash flow exercise

Joseph Pharmacy had sales of \$25,000 in December and \$30,000 in January. The company expects sales of \$20,000 in February and \$40,000 in both March and April, and \$30,000 in May.  The company has no other source of cash inflows. Half of the sales are paid for with cash. Twenty-five percent are paid for in each of the two months following the sale.

Joseph Pharmacy has the following expenses: (show all of your work)

·               Monthly rent of \$1,500

·               Wages of \$5,000 each month

·               Purchases

50% of next month’s sales

------------------------------------------------

o        Cash Outlay

§     20% in month purchased

§     80% in following month

From the information provided:

1.     Calculate the projected Cash Receipts for the three months of February, March, and April (Tables have been set up for you)   (30 points)

 Sales forecast December January February March April Cash Sales Collection of AR: Lagged 1 Month Lagged 2 Months Other Cash Receipts Total Cash Receipts

2.      Calculate the projected Cash Disbursements for the same months   (40 points)

A Schedule of Projected Cash Disbursements for Joseph Pharmacy

 Sales December January February March April Purchases (50% of next month’s sales)   Current month .20   1 month lag .80 Rent payments Wages/Salaries Total

1.  Indicate what the total cash balance would be at the end of these three months if the cash balance at the beginning of February was \$1,500.   (30 points)
 February Cash balance Total Cash Receipts December January February March April Cash Disbursements Balance Balance from Feb - April

4.              Define cash inflows and cash outflows (10 points)

5.              If I have a budget where expected gross receipts are what is obtained in #1 and my expected cash disbursements are what is obtained in #2.  What can you tell me about the cash balance (obtained in #3) if you were doing a variance analysis? (10 points)

6.              What is a cash budget, a flexible budget, CAPEX, and OPEX?  (10 points)

7.              How often do you use some form of budgeting?  Why?  10 points

8.              In the business world we have meetings where the departments who did not meet their monthly forecast come and explain their variances.  If this is common practice why is forecasting/budgeting so important?  10 points

I expect only the use of peer-reviewed research and credible websites, such as the AMA or CDC websites. I will not accept the use of such websites as Wikipedia. If you have a question about the credibility of a website, please ask about it in the Q&A forum and I will be happy to look at it for you.

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