Good cash management is an essential job of the financial manager!
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
1. Cash balance at start of month
2. Net cash gain (loss) during month
3. Cash balance. at end of month (before financing)
4. Minimum cash balance desired
5. Surplus cash (OR) Deficit cash (Line 3 - Line 4)
EXTERNAL FINANCING SUMMARY
6. External financing balance - start of month
7. New financing required (negative of Line 5) (if deficit!)
8. Financing repayments (if surplus!)
9. Ext financing balance - end of month
10.Cash balance at end of month (Line 3 + Line 7 + Line 8)
Assignment Details
Cash is King!
Good cash management is an essential job of the financial manager! You own a small auto sales business called King Kars. You stock up on inventory in February, April, June, and September. Your annual cash budget indicates that your MONTHLY NET CASH for the year will be the following:
JAN $5,000
FEB -$30,000
MAR $20,000
APRIL -$35,000
MAY $25,000
JUNE -$10,000
JULY $25,000
AUG $25,000
SEPT -$30,000
OCT $15,000
NOV $15,000
DEC $25,000
You begin the year with a cash balance of $50,000, and the minimum cash balance desired must be $50,000 every month. Prepare cash flow summary and external financing summary as noted in the Excel spreadsheet assigned to this submission.
- Do you believe that the company needs outside financing?
- What is the minimum line of credit to request from a lender?
- Do you think you are a good candidate for the line of credit? Why?
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Rating:
/5
Solution: Good cash management is an essential job of the financial manager!