Multiple cash budgets-Scenario analysis Brownstein, Inc., expects sales of $101,000 during each of the next 3 months. It will make monthly purchases of $56,000 during this time. Wages and salaries are $18,000 per month plus 5% of sales. Brownstein expects to make a tax payment of $16,000 in the next month and a $15,000 purchase of fixed assets in the second month and to receive $9,000 in cash from the sale of an asset in the third month. All sales and purchases are for cash. Beginning cash and the minimum cash balance are assumed to be zero. a. Construct a cash budget for the next 3 months. b. Brownstein is unsure of the sales levels, but all other figures are certain. If the most pessimistic sales figure is $83,000 per month and the most optimistic is $116,000 per month, what are the monthly minimum and maximum ending cash balances that the firm can expect for each of the 1-month periods? c. Briefly discuss how the financial manager can use the data in parts a. and b. to plan for financing needs. a. Construct a cash budget for the next 3 months. Complete the Brownstein, Inc.'s cash budget for the 1st month below: (Round to the nearest $000.) Brownstein, Inc. Cash Budget ($000) Most likely scenario Sales Sale of asset Purchases Wages and salaries Taxes Purchase of fixed asset Net cash flow Add: Beginning cash Ending cash $ $ $ $ $ $ $ $ $ 1st Month
Multiple cash budgets-Scenario analysis Brownstein, Inc., expects sales of $101,000 during each of the next 3 months. It will make monthly purchases of $56,000 during this time. Wages and salaries are $18,000 per month plus 5% of sales. Brownstein expects to make a tax payment of $16,000 in the next month and a $15,000 purchase of fixed assets in the second month and to receive $9,000 in cash from the sale of an asset in the third month. All sales and purchases are for cash. Beginning cash and the minimum cash balance are assumed to be zero. a. Construct a cash budget for the next 3 months. b. Brownstein is unsure of the sales levels, but all other figures are certain. If the most pessimistic sales figure is $83,000 per month and the most optimistic is $116,000 per month, what are the monthly minimum and maximum ending cash balances that the firm can expect for each of the 1-month periods? c. Briefly discuss how the financial manager can use the data in parts a. and b. to plan for financing needs. a. Construct a cash budget for the next 3 months. Complete the Brownstein, Inc.'s cash budget for the 1st month below: (Round to the nearest $000.) Brownstein, Inc. Cash Budget ($000) Most likely scenario Sales Sale of asset Purchases Wages and salaries Taxes Purchase of fixed asset Net cash flow Add: Beginning cash Ending cash $ $ $ $ $ $ $ $ $ 1st Month
Chapter6: Managing Cash Flow
Section: Chapter Questions
Problem 2EP
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Multiple cash budgets-Scenario analysis Brownstein, Inc., expects sales of $101,000 during each of the next 3 months. It will make monthly
purchases of $56,000 during this time. Wages and salaries are $18,000 per month plus 5% of sales. Brownstein expects to make a tax payment of
$16,000 in the next month and a $15,000 purchase of fixed assets in the second month and to receive $9,000 in cash from the sale of an asset in
the third month. All sales and purchases are for cash. Beginning cash and the minimum cash balance are assumed to be zero.
a. Construct a cash budget for the next 3 months.
b. Brownstein is unsure of the sales levels, but all other figures are certain. If the most pessimistic sales figure is $83,000 per month and the most
optimistic is $116,000 per month, what are the monthly minimum and maximum ending cash balances that the firm can expect for each of the
1-month periods?
c. Briefly discuss how the financial manager can use the data in parts a. and b. to plan for financing needs.
a. Construct a cash budget for the next 3 months.
Complete the Brownstein, Inc.'s cash budget for the 1st month below: (Round to the nearest $000.)
Brownstein, Inc.
Cash Budget ($000)
Most likely scenario
Sales
Sale of asset
Purchases
Wages and salaries
Taxes
Purchase of fixed asset
Net cash flow
Add: Beginning cash
Ending cash
$
$
$
$
$
$
$
$
$
1st Month
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