Net Cash Flows Essay Example

Net Cash Flows Essay Example Net Cash Flows Essay Net Cash Flows Essay Depreciation, buildingequipment Amortization, patent Gain on sale of equipment 9. 5 1. 0 Changes in current assets and current liabilities: Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Increase in accounts payable Increase in accrued liabilities Net cash flows from operating activities Cash Flows from Investing Activities: Purchase of equipment Sale of equipment Purchase of patent Net cash flows from investing activities Cash Flows from Financing Activities: Issue of notes payable Repayment of notes payable Issue of common stock Payment of dividends Net cash flows from financing activities 0. 3 0. 7 1. 5 3. 7 35. 7 2. 2 3. 0 3. 5 Prepare a cash budget for Elmsford Manufacturing Company for the first three months of 2011 based on the following information: Month Estimated Factory Estimated Selling and Estimated Sales overhead Administrative Expenses December 2010 January 2011 February 2011 March 2011 April 2011 $640,000 650,000 670,000 680,000 The company has found that approximately 40 percent of sales are collected during the month the sale is made and the remaining 60 percent are collected during the month following the sale. Material purchases are 30 percent of next months estimated sales, and payments lag these purchases by one month. Labor costs are 35 percent of next months sales and are paid during the month incurred. Factory overhead and selling and administrative expenses are paid during the month incurred. In addition, a payment for new equipment of $1. 5 million is due in February. Also, a tax payment of $1. 6 million and a dividend payment of $650,000 are due in March. The companys projected cash balance at the beginning of January is $1. 5 million. Furthermore, Elmsford desires to maintain a $750,000 cash balance at he end of each month. Elmsford Manufacturing Company Cash Budget First Three months of 2011 December January February March April sales Projected cash balance, beginning of month 1 . 500. Oho 750,000 640,000 Selling and administrative expenses Purchase martial Labor 644,000 taxes Dividends on common stock Purchase of new equipment Total disbursements Rejected cash balance, end of month 3. Baldwin Products Company anticipates reaching a sales level of $6 million in one year. The company expects earnings after taxes during the next year to equal $400,000. During the past several years, the company has been paying $50,000 in dividends to its stockholders. The company expects to continue this policy for at least 2010 follow. Baldwin Products Company Balance Sheet as of December 31, 2010 Cash $ 200,000 Accounts receivable 400,000 Fixed assets, net 500,000 assets $ 600,000 Notes payable Psychotherapeutic 500,000 200,000 1 Total Total liabilities and equity Income Statement for the Year Ending December 31 , 2010 Sales Expenses, including interest and taxes Earnings after taxes $ 300,000 Using the percentage of sales method, calculate the additional financing Baldwin Products will need over the next year at the $6 million sales level. Show the pro formal balance sheet for the company as of December 31 , 2011, assuming that a sales level of $6 million is reached. Assume that the additional financing needed is obtained in the form of additional notes payable. Answer: Additional financing needed=(A/AAAS-Cuscus)-(EAT-D) $500,000 Pro Formal Balance Sheet of DCE. 31, 2011 liabilities $300,000 accounts payable $900,000 Accounts receivable 600,000 Fixed assets, net notes payable 1 long-term debt stockholders equity Total assets Total liabilities and $3,450,000 Stockholders equity