Using the Cash Budget of the ToysRCash Inc store below, would you expect to have
ID: 2611603 • Letter: U
Question
Using the Cash Budget of the ToysRCash Inc store below, would you expect to have a "clean-up" period in the credit? If so, when and why?
2018 Cash Flow Total January Febuary March April May June July August September October November December COH previous month $ 147,000.00 $ 151,500.00 $ 105,250.00 $ 79,150.00 $ 74,449.00 $ 11,865.94 $ (25,572.10) $ (58,106.43) $ 82,407.18 $ 100,000.00 $ 100,000.00 $ 199,972.06 added LP $ 20,850.00 $ 25,551.00 $ 88,134.06 $ 125,572.10 $ 158,106.43 $ 17,592.82 Beging COH $ 147,000.00 $ 151,500.00 $ 105,250.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 199,972.06 Expected Sales $ 10,000.00 $ 11,000.00 $ 13,000.00 $ 11,000.00 $ 250,000.00 $ 350,000.00 $ 450,000.00 $ 500,000.00 $ 365,000.00 $ 14,000.00 $ 13,000.00 $ 13,000.00 $ 2,000,000.00 Collections 30 & 90 $ 30,000.00 $ 6,500.00 $ 7,150.00 $ 8,450.00 $ 7,150.00 $ - $ - $ 162,500.00 $ 227,500.00 $ 292,500.00 $ 325,000.00 $ 237,250.00 Gross profit for month $ 33,500.00 $ 10,350.00 $ 11,700.00 $ 12,300.00 $ 94,650.00 $ 122,500.00 $ 157,500.00 $ 337,500.00 $ 355,250.00 $ 297,400.00 $ 329,550.00 $ 241,800.00 COGS $ 3,000.00 $ 3,300.00 $ 3,900.00 $ 3,300.00 $ 75,000.00 $ 105,000.00 $ 135,000.00 $ 150,000.00 $ 109,500.00 $ 4,200.00 $ 3,900.00 $ 3,900.00 $ 600,000.00 Labor $ 3,000.00 $ 3,300.00 $ 3,900.00 $ 3,300.00 $ 75,000.00 $ 105,000.00 $ 135,000.00 $ 150,000.00 $ 109,500.00 $ 4,200.00 $ 3,900.00 $ 3,900.00 $ 600,000.00 Operating Expenses $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 240,000.00 Fixed Asset Purchase $ 30,000.00 $ 30,000.00 PP $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 100,000.00 Interest on ST $ 1,251.00 $ 2,784.06 $ 8,072.10 $ 15,606.43 $ 25,092.82 $ 26,148.38 $ 21,342.29 $ 7,082.82 $ 107,379.91 Pay Back on ST $ 80,101.62 $ 237,657.71 $ 118,047.08 Total of Expenses $ 26,000.00 $ 56,600.00 $ 37,800.00 $ 37,851.00 $ 182,784.06 $ 248,072.10 $ 315,606.43 $ 355,092.82 $ 355,250.00 $ 297,400.00 $ 162,929.90 $ 37,800.00 Before Taxes $ 7,500.00 $ (46,250.00) $ (26,100.00) $ (25,551.00) $ (88,134.06) $ (125,572.10) $ (158,106.43) $ (17,592.82) $ (0.00) $ 0.00 $ 166,620.10 $ 204,000.00 Tax paid $ 3,000.00 $ (0.00) $ 0.00 $ 66,648.04 $ 81,600.00 Net Profit $ 4,500.00 $ (46,250.00) $ (26,100.00) $ (25,551.00) $ (88,134.06) $ (125,572.10) $ (158,106.43) $ (17,592.82) $ (0.00) $ 0.00 $ 99,972.06 $ 122,400.00 Ending Cash $ 151,500.00 $ 105,250.00 $ 79,150.00 $ 74,449.00 $ 11,865.94 $ (25,572.10) $ (58,106.43) $ 82,407.18 $ 100,000.00 $ 100,000.00 $ 199,972.06 $ 322,372.06 Minimum ending Cash $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 Over/Short $ 51,500.00 $ 5,250.00 $ (20,850.00) $ (25,551.00) $ (88,134.06) $ (125,572.10) $ (158,106.43) $ (17,592.82) $ (0.00) $ (0.00) $ 99,972.06 $ 222,372.06 Cummulative ST $ 20,850.00 $ 46,401.00 $ 134,535.06 $ 260,107.16 $ 418,213.59 $ 435,806.41 $ 355,704.79 $ 118,047.08Explanation / Answer
Based on the analysis of the Cash Budget given, we expect that there would be a "clean-up" period in the credit in two months.
As we can see that ending cash balance in June and July are negative,hence there would be credit clean up in those months.