ACCT105-BSC

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American Public University *

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105

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Finance

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Jan 9, 2024

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October 29, 2023 MEMORANDUM FOR EDGE SOCCER PROGRAMS SENIOR MANAGEMENT PREPARED BY SARA ANEMA SUBJECT: CASH BUDGET The two-month cash budget for the Edge Soccer Programs (Edge) started with an opening cash balance in January of $10,500. Adding to the balance with the collection of cash receipts from customers and notes receivable brought January cash available to $30,000. The cash outflow in January consisted of equipment purchases as well as selling and administrative expenses which totaled $18,500. The ending cash balance for January exceeded the desired minimum cash balance by $1,500. The opening balance for February was 11,500. Adding the cash receipts from customers brought February cash available to $26,700. The cash outflow for February consisted of equipment sales as well as selling and administrative expenses which totaled $17,700. The ending cash balance dipped below the desired minimum cash balance by $1,000 so Edge borrowed $1,000 in order to maintain the minimum desired cash balance. The total of cash balance at the end of the two-month period remained constant which indicated Edge is able to operate in a positive state and meet the goal of minimum desired balance. However, in order for the company to increase cash flow the company must continue to increase the cash receipts from customers in addition to continuing to collect the notes receivable. Minimizing the cash payments will provide another means of maintaining a positive cash flow by reducing equipment purchases and finding creative and cost-effective savings in relation to the selling and administrative expenses. The ending cash balance after the two-month cash budget is $10,000 which is right at the minimum desired cash balance. If Edge does not increase cash inflow, borrowing will continue to occur

and Edge will begin to increase the monies borrowed, which over time, will provide a negative outcome as the repayment of the financing begins in May. Therefore, Edge is encouraged to reduce cash payments and increase cash available, when this is accomplished, the company will be in a better position to repay the cash borrowed and increase the bottom line. The following items are recommendations for Edge over the next reporting period. Review the organization plan and make changes where appropriate and needed. Minimize the equipment purchases and selling and administration expenses as able. Review any competition in the service industry. Consider any effects of existing or possible government regulations. Review previous annual reports for any negative/positive cash inflow/outflow trends. Develop and communicate long-range goals and objectives to the entire organization. Ensure these goals contain the precise level and quality of service, sales and earning growth rates and provide the targeted market.

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