FINANCIAL RESOURCES & DECISIONS

Managing Financial Resources & Decisions

Assignment # 2

[Name of Instructor]

Executive Summary

Our Business, ABC computer manufacturer will produce computers for home consumers as well as business consumers. This paper aims to present the projected cash budget of our business and also the solution to improve liquidity problem of the bsiness. The paper also includes a comparision between two projects and the unit cost and unit selling price of the products.

Table of Contents

Part A (P2 bc; P3)1

Task 11

Task 22

Task 33

Task 43

Task 54

Task 65

Task 75

Part B (P3)6

Task 1 (a)6

Task 1 (b)7

Task 1 (c)7

Task 28

Part C (P3)9

Task 19

Conclusion10

Self Evaluation11

Managing Financial Resources & Decisions

Assignment # 2

Part A (P2 bc; P3)

Task 1

Cash Budget

Usually the treasury or management of an organization manages financial cash. The cash budget is useful for the process is usually a monthly projection of income and debts. The cash budget indicates the possible availability of the same relationship as much as the timing and magnitude. In other words, say how much cash is likely to have, when and for how long. It is necessary to take into account the uncertainty and to do so, prepare budgets multiple effects under alternative assumptions. In this way, the cash budget is the basis for planning and control (Soenen, 1993, pp 53-57).

The cash budget indicates the on the whole cash position, with cash inflows coming about because of arranged bargains and cash outflows coming about because of arranged consumption on wages, raw materials, capital use, and so forth. (So that any envisioned cash surpluses or deficiencies appear in great chance to bargain with them). At last the expert budget conglomerates every last trace of the preceding budgets to handle a budgeted benefit-and-misfortune record and a budgeted accounting report, demonstrating what benefit could be earned and what the year-finish position can be, furnished that true operations head off consistent with arrangement (Raheman, 2007, pp 275 - 296).

The business possessor plans the cash budget on a monthly foundation and takes a gander at the cash the solid takes in versus the cash the immovable takes out. This report truly lets the business owner ability much cash is good to go to the immovable at the close of each month and if the solid needs to obtain or can reimburse at one time obtained finances. Essentially, the cash budget is a short-term financial proclamation, taking a gander at monthly or quarterly cash information (Narware, 2004, pp 120-127).

Task 2

Cash Budget

Months

June

July

August

September

October

November

Beginning Balance

$0.00

-$3,351.00

-$3,802.00

-$3,703.00

-$2,654.00

-$1,105.00

Cash from Operations

$5,000.00

$7,000.00

$8,000.00

$9,000.00

$10,000.00

$9,000.00

Total available cash

$5,000.00

$3,649.00

$4,198.00

$5,297.00

$7,346.00

$7,895.00

Less:

Cost of Goods Sold

$3,500.00

$2,500.00

$2,750.00

$2,900.00

$3,100.00

$3,000.00

Licenses

$417.00

$417.00

$417.00

$417.00

$417.00

$417.00

Maintenance

$1,000.00

$1,100.00

$1,300.00

$1,200.00

$1,500.00

$1,400.00

Salaries

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

Selling Expense

$417.00

$417.00

$417.00

$417.00

$417.00

$417.00

Office Expense

$433.00

$433.00

$433.00

$433.00

$433.00

$433.00

Other

$84.00

$84.00

$84.00

$84.00

$84.00

$84.00

Cash Expenses

$8,351.00

$7,451.00

$7,901.00

$7,951.00

$8,451.00

$8,251.00

Ending Cash Balance

-$3,351.00

-$3,802.00

-$3,703.00

-$2,654.00

-$1,105.00

-$356.00

The cash balances are obtained from the ending cash balance of each month, cash from operations is obtained from the year 1 income statement. We have divided the cash inflows and out flows of year 1 upon the number of months.

Task 3

Comment over the Cash Budget

The business starts in the month of June therefore no cash balance is available in the cash account, the only cash inflow was due to the sales. After the deduction of the year expenses the ending cash balance of the month of June ...