INDIVIDUAL ASSIGNMENT

FINANCIAL MANAGEMENT
COURSE CODE: FIN420
ACADEMIC SESSION: 20214

QUESTION 1

Below is the information for Cendana Jutamas Sdn. Bhd.:

a) Cendana Jutamas’s Sales for the first eight months of 2020 in Ringgit Malaysia (RM) are
as follows:

January 90,000 May 300,000

February 120,000 June 270,000
March 135,000 July 225,000
April 240,000 August 150,000

10% of sales is in cash, another 60% is collected in the following month and 30% is
collected in the second month following Sales.

b) Cendana Jutamas purchases raw materials one month before its Sales. The amount of raw
materials needed is 50% of its Sales. 50% of the purchases are paid in the month of
purchase and the balance is paid one month after the purchase.

c) The company pays RM10,000 per month for renting purposes, RM25,000 for salaries and
RM20,000 each month for other expenditures. Depreciation is fixed at RM5,000 per
month.

d) Annual interest of RM30,000 is to be paid in May, June and July 2020.

e) A new machine worth RM110,000 will be purchased in June in order to replace the
existing machine.

f) The firm will receive dividends of RM40,000 from its investment beginning of each
quarter.

g) The firm’s cash balance on 31st March is RM10,000 and a minimum balance of RM10,000
is to be maintained at all times.

Instructions:
1) Prepare a Cash Budget for Cendana Jutamas Sdn. Bhd. covering the second quarter period
of the year 2020.

2) Discuss and recommend the Cash Management Strategy based on the cash position at the
end of each period (Surplus or Deficit).

(25 marks)

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QUESTION 2
Kirana Frozenfood Corporation Berhad reported Sales of RM70,000 in May and RM80,000 in
June 2020. The forecasted Sales for July, August and September 2020 are RM90,000,
RM100,000, and RM110,000, respectively. The beginning cash balance on the 1st of July is
RM3,000 on and the firm wishes to maintain a minimum cash balance of RM5,000. The total
long-term liabilities of the company is RM25,000.

a) The firm makes 20% of Sales for cash, 60% is collected in the next month, and the
remaining 20% is collected in the second month following the Sale.

b) The firm receives other income of RM2,000 per month.

c) The firm’s actual or expected purchases, all made for cash, are RM65,000, RM70,000,
and RM85,000 for the months of July through September, respectively.

d) Rental expenses are RM5,500 per month.

e) Wages and salaries are 10% of the previous month’s Sales.

f) The net income is RM30,000. Cash dividends are 20% of the net income and will be
paid in August.

g) The payment of principal and interest of the long-term liabilities is 20% of the total
long-term liabilities and the payment is due in August.

h) A cash purchase of equipment costing RM15,500 is scheduled in September.

i) The earnings before taxes is RM100,000. The taxes amount is 10% of the earnings
before taxes and it is due for payment in the month of August.

Instructions:
1) Given the above information, develop a Cash Budget for Kirana Frozenfood
Corporation Berhad covering the second quarter period of 2020, namely for the
months of July, August and September 2020.

2) Discuss and recommend the Cash Management Strategy based on the cash position
at the end of each period (Surplus or Deficit).

(25 marks)

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Important Format:

1. Answer all questions.

2. Handwritten. Label your personal details (Full Name and Student ID) on each page of your
answer script and number your pages. Please ensure legibility.
3. Scan, convert into PDF form and upload into the specific Individual Assignment Folder in
your Google Classroom.
4. Provide in detail your working computation on your answer sheet.
5. Deadline is within 2 weeks time.