Note: There are two parts to this learning team assignment; Part 1 was completed in Week 3.
Review the “Precision Machines” document and spreadsheet.
Prepare a cash budget for Precision Machines in Microsoft® Excel®.
Create a 1,225-word strategic analysis and include the following:
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.
Format your documents consistent with APA guidelines.
fin370r10_precision_machines_financial_statements_week_3_and_5.xls
fin370r10_precision_machines_team_assignment_weeks_3_and_5.doc
Unformatted Attachment Preview
Precision Machines
Student Note: Fill in the light yellow cells
Data:
Annual Cost of borrowing
Minimum Cash Balance
Beginning Cash Balance
Revenues (Sales)
Cash Collections
First Month (30%)
Second Month (35%)
Third Month (35%)
Total Collections
Cash Disbursements
Material Purchases
Salaries
Wages
Other Expenses
Capital Expenditure
Dividends
Interest
Total Disbursements
Cash flows
Net cash flows
Cumulative cash flows
Minimum Cash Balance
Cash Surplus or (Deficit)
Recommendations:
November
December
January
February
$40.000,00
$50.000,00
$48.000,00
$55.000,00
November
December
January
February
6.000,00
3.000,00
6.000,00
3.500,00
10,00%
$5.000,00
$7.500,00
March
April
May
June
$35.000,00
$50.000,00
$65.000,00
$40.000,00
March
April
May
June
6.000,00
3.000,00
6.000,00
3.200,00
6.000,00
3.500,00
6.000,00
3.000,00
45.000,00
1.000,00
1.000,00
Precision Machines Team Assignment
FIN/370 Version 10
University of Phoenix Material
Precision Machines
Read the following case study:
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 company’s sales shows that the company’s 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.
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