BLADES PTY.

LTD

A Case Study in Cash Budgeting

Sales,COGS & Purchases Budget

S ales COGS Purch
Budgeted 0.75 (1mnthAdv)
January $158,000 $118,500 $120,000
February $160,000 $120,000 $123,000
March $164,000 $123,000 $129,000
April $172,000 $129,000 $132,000
May $176,000 $132,000 $138,000
June $184,000 $138,000 $142,500
July $190,000 $142,500 $144,000
Augus t $192,000 $144,000 $157,500
S eptember $210,000 $157,500 $172,500
October $230,000 $172,500 $195,000
November $260,000 $195,000 $135,000
December $180,000 $135,000 Slide 2

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 SALES & Purchases Cash Flows

Sales Purch Cash Patterns: Sales Purch

April $161,200 $126,000 % Mnth Sale/Purch 0% 50%
% 1 Month After 30% 50%
May $166,400 $130,500
% 2 Month After 70% 0%
June $173,200 $135,000 % 3 Month After 0% 0%
July $178,400 $140,250 TOTAL COLECTNS: 100% 100%
August $185,800 $143,250
September $190,600 $150,750
October $197,400 $165,000
November $216,000 $183,750
December $239,000 $165,000
Slide 3

CASH BUDGET (2nd Quarter)

April May June Total
Opening Balance $20,000 $20,000 $20,000 $20,000
Sales/Debtors $161,200 $166,400 $173,200 $500,800
Tot.Cash Avail $181,200 $186,400 $193,200 $520,800
Less:Disbrsmnts
Purch/Creditors ($126,000) ($130,500) ($135,000) ($391,500)
Operatng Expenses
Salaries & Wages ($10,000) ($10,000) ($10,000) ($30,000)
Adv & Promotion ($1,000) ($1,000) ($1,000) ($3,000)
Rent & Rates ($4,500) ($4,500)
Insurance $0 $0 $0
Utilities ($500) ($500) ($500) ($1,500)
Depreciation n.a. n.a. n.a. $0
Corporate Tax ($16,000) ($16,000)
Equipment Purch ($22,300) ($29,000) ($51,300)
Interst @ 12% ($530) ($530)
Net Cash Position $5,400 $15,400 $41,670 $22,470
Principle Repaymnts ($19,200) ($19,200)
(Invest)/Borrow $14,600 $4,600 ($2,470) $16,730
Closing Balance $20,000 $20,000 $20,000 $20,000 Slide 4

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 Budgeted Income Statement for 2nd Quarter

S ales Revenue $532,000

COGS ($399,000)
Gros s Profit $ 133,000
Les s :Operating Expens es
S alaries & Wages ($30,000)
Adv & Promotion ($3,000)
Rent & Rates ($4,500)
Ins urance ($1,200)
Utilities ($1,500)
Depreciation ($4,500)
Les s : Finance Charges
Inters t ($530)
($45,230)
Net Profit $87,770
Corporate Tax ($35,108)
Retained Earnings $52,662
Slide 5

Budgeted Balance Sheet as at June

ASSETS Opening Funds Flows Clos ing
Cas h $20,000 $0 $20,000
AccRecvbl $276,000 $31,200 $307,200
Bad Debts $0 $0 $0
Inventory $129,000 $13,500 $142,500
UnexpIns urance $4,000 ($1,200) $2,800
Short Term Inves tments $0 $2,470 $2,470
F.As s ets @ WDV $172,700 $51,300 $224,000
Depreciation $0 ($4,500) ($4,500)
TOTAL ASSETS $601,700 $92,770 $694,470
LIABILITIES/EQUITY
AcctSPayabl $190,500 $21,000 $211,500
Divs Payable $0 $0 $0
Loans Payable $0 $0 $0
Tax Payable $16,000 $19,108 $35,108
Capital $300,000 $0 $300,000
Retained Earnings $95,200 $52,662 $147,862
TOTAL LIAB+EQUITY $601,700 $92,770 $694,470
Slide 6