Precision Machines Part 2, accounting assignment help

Anonymous
timer Asked: Oct 8th, 2016
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Question Description

 Recommend a cash management strategy for the company that will minimize the financing cost and increase the cash flows for the company. Its needs to be at least 300 WORDS. Review Precision Machines document and Spreadsheet.

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Precision Machines Read the following case study: Precision Machines is preparing a financial plan for the next six months to determine the financial needs of the company. The historical analysis of the company’s sales shows that the company’s total sales are 30% cash sales and 70% credit sales. Further analysis of credit sales shows that the company receives 50% of the credit sales one month after the sale and the remaining 50% in the second month after the sale. This means the cash collections from sales are 30% in the first month of the sale, 35% in the second month, and 35% in the third month. The materials purchased by the company amounts to 50% of the sales for the month. The company pays for the purchases one month after the initial purchase. The company likes to maintain a cash balance of $5,000. The cost of borrowing is 10%. The company plans to pay off the loan whenever there is a surplus and borrow when there is a deficit. The attached spreadsheet shows revenues (sales), expenses, capital expenditures, and other expenses for Precision Machines’ next six months. Using the information given on the spreadsheet, prepare a cash budget for January through June and determine the cash surplus, deficit, and the financing needs of the company. ...
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Tutor Answer

ProfCray
School: UC Berkeley

Thanks for your patience, here is my answer.

Precision Machines
Student Note: Fill in the light yellow cells
Data:
Annual Cost of borrowing
Minimum Cash Balance
Beginning Cash Balance
Revenues (Sales)

Cash Collections
First Month (30%)
Second Month (35%)
Third Month (35%)
Total Collections

November

December

January

February

$40.000,00

$50.000,00

$48.000,00

$55.000,00

10,00%
$5.000,00
$7.500,00

$

November
December
January
February
12.000,00 $ 15.000,00 $ 14.400,00 $ 16.500,00
$ 14.000,00 $ 17.500,00 $ 16.800,00
$ 14.000,00 $ 17.500,00
12.000,00
29.000,00
45.900,00
50.800,00

Cash Disbursements
Material Purchases
Salaries
Wages
Other Expenses
Capital Expenditure
Dividends
Interest
Total Disbursements
Cash flows
Net cash flows
Cumulative cash flows
Minimum Cash Balance
Cash Surplus or (Deficit)

12.000,00
19.500,00
5.000,00
14.500,00

$20.000,00

$25.000,...

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Review

Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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