CASO KEAFER MANUFACTURING

Chapter 26

Keafer Manufacturing Working Capital Management

Input Area:

A/R $553.000

Percent uncollectible 10%

Collection period 57

% of purchases for next Q sales 50%

Suppliers paid 53

% of sales for expenses 25%

Interest and dividends $148.000

Outlay in third Q $260.000

Beginning cash balance $149.500

Target cash balance $90.000

Borrowing rate 1,2%

Invested securities 0,5%

Beginning short-term borrowing $-

Q1 Q2 Q3 Q4

Last years' sales $735.000 $761.000 $817.000 $709.000

Growth rate in sales 5,00%

Output Area:

Sales next year $771.750,00 $799.050,00 $857.850,00 $744.450,00

Sales following year $810.337,50

Quarterly cash flow

Q1 Q2 Q3 Q4 Sales

Collections from previous quarter $497.700,00 $488.775,00 $506.065,00 $543.305,00 Purchases

Collections from current quarter sales 282.975,00 292.985,00 314.545,00 272.965,00 Uses of Cash

Payments to suppliers for previous quarter (227.237,50) (235.275,83) (252.589,17) (219.199,17) Payments of Accounts Payable

Payments to suppliers for current quarter (164.249,17) (176.335,83) (153.025,83) (166.569,38) Wages, Taxes, and other expenses

Wages, taxes, and other Expense (192.937,50) (199.762,50) (214.462,50) (186.112,50) Capital Expenditures

Interest (148.000,00) (148.000,00) (148.000,00) (148.000,00) Long term financing expenses:

Capital expenditures (260.000,00) Interest and Dividends

Net cash flow $48.250,83 $22.385,83 $(207.467,50) $96.388,96 Total Uses of Cash

Cash Budget

Q1 Q2 Q3 Q4

Beginning cash balance $149.500,00 $197.750,83 $220.136,67 $12.669,17

Net cash inflow 48.250,83 22.385,83 (207.467,50) 96.388,96

Ending cash balance $197.750,83 $- $220.136,67 $12.669,17 $109.058,13

Minimum cash balance 90.000,00 (90.000,00) 90.000,00 90.000,00 90.000,00

Cumulative surplus (deficit) $107.750,83 $(90.000,00) $130.136,67 $(77.330,83) $19.058,13

Short-term Financial Plan

Target cash balance $90.000,00 $90.000,00 $90.000,00 $90.000,00 $90.000,00

Net cash inflow

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