This 5 page paper is based on a case study supplied by the student and shows how figures provided can be used create a cash flow projection and a balance sheet and an income statement. The paper then considers why, even if in these months, the company is profitable, it might need a loan due to the carriage of previous debts. The bibliography cites 3 sources.
Name of Research Paper File: TS14_TEvickite.rtf
Unformatted Sample Text from the Research Paper:
in revenue. We are told that sales made on one moth will see the revenue spread over that and the following two months. Assuming that 60% is received in the
same month as the sale, 30% the following month, and 10% the month after we can calculate the income streams for January, February and March as follows. Jan
Feb Mar sales 62,000 75,000 38,000 Income received 47200 66100 51500 Next we need to calculate any outgoings, but as we are not given the figures for the purchases of
inventory we need to calculate this. We are starting with an opening stock level of 39,500, but as the company are moving to a just in time system no more
stock will be bought until the inventory level of only 6,000 and retained at that level, with stock bought in the same month it is sold. The cost is 4
per kite against a selling price of 8, making the inventory cost 50%. This gives us the following in terms of the required stock purchases. Jan Feb Mar
Inventory balance 39,050 8,050 6,000 Inventory sold 31,000 37,500 19,000 Required purchases 0 35,450 19000 New Inventory level 8,050 6,000 6,000 The cost we need to calculated the premium on
the rent, payable on the 10th of the month quarterly in arrears, here it is due in January. The amount is 10% on any sales over 10,000. So for the
cash flow we also need to calculate this. This will give us the following 0ct Nov Dec Total sales 38,000 25,000 25,000 10% of balance over 10,000 2800
1500 1500 5800 Now we have enough to put together a monthly break down of all cash flow that we can use to create the required accounts. We need