cash flow-case study

Cash book

Month 1 2 3 4 5 6

Opening cash balance 350,000 350,000 (400,000) 550,000 550,000 1,000,000

Cash sale 500,000 1,700,000 500,000 1,200,000 2,300,000

Cash expense (500,000) (750,000) (750,000) (500,000) (750,000) (250,000)

Net cash flow - (750,000) 950,000 - 450,000 2,050,000

Closing cash balance 350,000 (400,000) 550,000 550,000 1,000,000 3,050,000

Stock-chart

Month 1 2 3 4 5 6

Opening - 5,000 13,000 13,000 16,000 16,000

Production 10,000 15,000 15,000 10,000 15,000 5,000

Selling (5,000) (7,000) (15,000) (7,000) (15,000) (20,000)

Closing 5,000 13,000 13,000 16,000 16,000 1,000

Profit

Month 1 2 3 4 5 6

Opening profit 250,000 500,000 850,000 1,600,000 1,950,000 2,700,000

Profit in the month 250,000 350,000 750,000 350,000 750,000 1,000,000

Closing profit 500,000 850,000 1,600,000 1,950,000 2,700,000 3,700,000

Total expense each pack 50

Profit per pack 50

7

3,050,000

700,000

700,000

3,750,000

At the start of this growing season she had $3,000 in the bank.

SEEDS Finacial Planning

Mapping all the figures on a table

Input

Plant area 40.00

Productivity 8.50

Sales price 100.00

Support budget 25.00

Month September

1. Opening balance 3,000

2. Cash in (Total) 0

Sales 0

3. Cash out (Total) (1,950)

buys and plants seeds -1000

buys fertiliser 0

Pays herself -450

for assistance -500

pays rent 0

Taxes 0

4. Net Cash flow (=Total Cash in-Total cash out) (1,950)

5. Closing balance (=(1)+(4)) 1,050

Profit from planting rapes (=2-3) -1,950

Profit of this season 24,000

2.The farmerA farmer grows rape seed on her farm. She has 40 hectares of usable land. She expects a yield of 8.5 tons/hectare and

should receive $100 cash per ton from the buyer, and $25 per tonne as a subsidy payment from the EU Agricultural

Support budget. She grows one crop per year, which she sells in August. In September she buys and plants seeds, 4 tons

at a price of $250 per ton. She buys fertiliser in November and March; 15 tons each time at $80 per ton. She pays herself

$450 per month and also pays $500 four times each year for assistance in seeding September, fertilising and reaping in

November, March and August. She pays rent of $1,500 in January, April, July and October, and taxes of $1,700 in May.

All transactions are in cash.

Question 1: profit that she expects to make this season is $24000

Question 2: She needs arrange an overdraft with her banker because her budget is declined from October from current year to July of next year

Question 3: She needs an overdraft from October of current year to July of next year

She needs a max overdraft is $-14550 . The overdraft should be made in the first disbursement from October of current year

with the amount of disbursement under above time line from October of current year to July of next year to save borrowing interest.

Unit

Hectares

per Hectare

Ton

Ton

October November December

1,050 (900) (3,050)

0 0 0

0 0 0

(1,950) (2,150) (450)

0 0 0

0 -1200 0

-450 -450 -450

0 -500 0

-1500 0 0

0 0 0

(1,950) (2,150) (450)

(900) (3,050) (3,500)

-1,950 -2,150 -450

2.The farmerA farmer grows rape seed on her farm. She has 40 hectares of usable land. She expects a yield of 8.5 tons/hectare and

should receive $100 cash per ton from the buyer, and $25 per tonne as a subsidy payment from the EU Agricultural

Support budget. She grows one crop per year, which she sells in August. In September she buys and plants seeds, 4 tons

at a price of $250 per ton. She buys fertiliser in November and March; 15 tons each time at $80 per ton. She pays herself

$450 per month and also pays $500 four times each year for assistance in seeding September, fertilising and reaping in

November, March and August. She pays rent of $1,500 in January, April, July and October, and taxes of $1,700 in May.

All transactions are in cash.

Question 2: She needs arrange an overdraft with her banker because her budget is declined from October from current year to July of next year

Question 3: She needs an overdraft from October of current year to July of next year

She needs a max overdraft is $-14550 . The overdraft should be made in the first disbursement from October of current year

with the amount of disbursement under above time line from October of current year to July of next year to save borrowing interest.

January February March

(3,500) (5,450) (5,900)

0 0 0

0 0 0

(1,950) (450) (2,150)

0 0 0

0 0 -1200

-450 -450 -450

0 0 -500

-1500 0 0

0 0 0

(1,950) (450) (2,150)

(5,450) (5,900) (8,050)

-1,950 -450 -2,150

April May Jun

(8,050) (10,000) (12,150)

0 0 0

0 0 0

(1,950) (2,150) (450)

0 0 0

0 0 0

-450 -450 -450

0 0 0

-1500 0 0

0 -1700 0

(1,950) (2,150) (450)

(10,000) (12,150) (12,600)

-1,950 -2,150 -450

July August

(12,600) (14,550)

0 42,500

0 42,500

(1,950) (950)

0 0

0 0

-450 -450

0 -500

-1500 0

0 0

(1,950) 41,550

(14,550) 27,000

-1,950 41,550

Cash Flow from overheads

Month 1 2

1. Opening balance 36,000.00$ 20,250.00$

2. Cash in (Total) -$ -$

Sales -$ -$

3. Cash out (Total) 15,750.00$ 14,750.00$

Overdraft -$

Rent office 3,000.00$ 3,000.00$

Furniture 1,000.00$

Cars 1,000.00$ -$

Rates, Insurance etc 1,000.00$ 1,000.00$

Tax -$ -$

Services 250.00$ 250.00$

Salaries and expenses 9,500.00$ 9,500.00$

Sundries -$ 1,000.00$

4. Net Cash flow (=Total Cash in-Total cash out) (15,750.00)$ (14,750.00)$

5. Closing balance (=(1)+(4)) 20,250.00$ 5,500.00$

Cash Flow from purchases and sales

Period 1.00$ 2.00$

1. Opening balance -$ 7,000.00$

2. Cash in (Total) 15,000.00$ 24,000.00$

Sales 15,000.00$ 24,000.00$

Account receivables

3. Cash out (Total) 8,000.00$ 15,000.00$

Purchases 8,000.00$ 15,000.00$

4. Net Cash flow (=Total Cash in-Total cash out) 7,000.00$ 9,000.00$

5. Closing balance (=(1)+(4)) 7,000.00$ 16,000.00$

Cash Flow

Period 2 months After

1. Opening balance 36,000.00$ (78,500.00)$

2. Cash in (Total) 54,000.00$ 141,000.00$

Wholesale Phone Ltd

Sales 54,000.00$

Account receivables 141,000.00$

3. Cash out (Total) 168,500.00$ 16,468.00$

overheads 30,500.00$

purchases and sales 138,000.00$ -$

Account payable 16,468.00$

4. Net Cash flow (=Total Cash in-Total cash out) (114,500.00)$ 124,532.00$

5. Closing balance (=(1)+(4)) (78,500.00)$ 46,032.00$

Opening banking balance (credit) (12,468.00)$

(90,968.00)$

After 2 months, CF is $-78500

He had set up an overdraft limit of $80.000 with the bank, that was not enough, the opening banking balance is $-12468 so that the overdraft limit has larger $-90968

=> he has every right to be worried, very worried!

Wholesale Phones Ltd

Three shareholders, Sandra, Sumira and Ranjit, have just set up a small company that buys mobile phones from Asia and the sells them to wholesalers in Europe. Marketing and selling is done using the Internet. When they started trading, Ranjit the Accountant, arranged an overdraft with the Bank for $100,000. They had also deposited $36,000 in cash in return for the initial share issue.

The early weeks were very hard, but the market was growing. Sales were very good, and all the owners' efforts were put into buying and selling. Credit control was ignored, and Ranjit let the work on the cash flow forecast slip.

The owners are in the boardroom when the receptionist interrupts them.

'Ranjit, phone the Bank Manager at once. Unless you talk to her, she will call our overdraft in.'

'What is she on about', said Sandra, 'does that mean I will have to cancel the order for my BMW?'

Ranjit went to his office. He had not really checked the cash position for two months.

He was a little worried. His records showed the following.

Opening bank balance - $12,468 credit

Overheads

Rent: Office $3,000 per month. Both months paid.

Furniture: $1,000 per month. One month paid.

Cars: $1,000 per month. One month paid.

Rates, Insurance etc: $1,000 per month. Both months paid.

Tax: $500 per month. None paid.

Services: $250 per month. Both months paid.

Salaries and expenses: $9,500 per month. Both months paid.

Sundries: $1,000 per month. One month paid.

Sales

Period 1: $15,000 All paid for.

Period 2: $24,000 All paid for.

Period 3: $30,000 Half paid for.

Period 4: $40,000 No payments received.

Period 5: $86,000 No payments received.

Purchases

Period 1: $8,000 Paid.

Period 2: $15,000 Paid.

Period 3: $15,000 Paid.

Period 4: $55,000 Paid.

Period 5: $45,000 Paid.

Was he right to be worried, and will Sandra get her car? He had set up an overdraft limit of $80,000 with the bank. Surely that was enough?

After

5,500.00$

-$

-$

16,468.00$

12,468.00$

-$

1,000.00$

1,000.00$

-$

1,000.00$

-$

-$

1,000.00$

(16,468.00)$

(10,968.00)$

3.00$ 4.00$ 5.00$ After

16,000.00$ 16,000.00$ (39,000.00)$ (84,000.00)$

15,000.00$ -$ -$ 141,000.00$

15,000.00$ -$ -$ -$

141,000.00$

15,000.00$ 55,000.00$ 45,000.00$ -$

15,000.00$ 55,000.00$ 45,000.00$ -$

-$ (55,000.00)$ (45,000.00)$ 141,000.00$

16,000.00$ (39,000.00)$ (84,000.00)$ 57,000.00$

He had set up an overdraft limit of $80.000 with the bank, that was not enough, the opening banking balance is $-12468 so that the overdraft limit has larger $-90968

Three shareholders, Sandra, Sumira and Ranjit, have just set up a small company that buys mobile phones from Asia and the sells them to wholesalers in Europe. Marketing and selling is done using the Internet. When they started trading, Ranjit the Accountant, arranged an overdraft with the Bank for $100,000. They had also deposited $36,000 in cash in return for the initial share issue.

The early weeks were very hard, but the market was growing. Sales were very good, and all the owners' efforts were put into buying and selling. Credit control was ignored, and Ranjit let the work on the cash flow forecast slip.

Was he right to be worried, and will Sandra get her car? He had set up an overdraft limit of $80,000 with the bank. Surely that was enough?

Three shareholders, Sandra, Sumira and Ranjit, have just set up a small company that buys mobile phones from Asia and the sells them to wholesalers in Europe. Marketing and selling is done using the Internet. When they started trading, Ranjit the Accountant, arranged an overdraft with the Bank for $100,000. They had also deposited $36,000 in cash in return for the initial share issue.

The early weeks were very hard, but the market was growing. Sales were very good, and all the owners' efforts were put into buying and selling. Credit control was ignored, and Ranjit let the work on the cash flow forecast slip.

Three shareholders, Sandra, Sumira and Ranjit, have just set up a small company that buys mobile phones from Asia and the sells them to wholesalers in Europe. Marketing and selling is done using the Internet. When they started trading, Ranjit the Accountant, arranged an overdraft with the Bank for $100,000. They had also deposited $36,000 in cash in return for the initial share issue.

Chart 1 : purchase,stock and sales

Week1 Week2 Week3

Purchases -$ 100.00$ -$

Sales by cash -$ -$ 50.00$

Sales 2 weeks credit 20.00$

Sales 3 weeks credit

Stock -$ 100.00$ 30.00$

profit 1 product -$

Chart 2: Cash flow statement

Week1 Week2 Week3

1. Opening balance 100,000.00$ 99,700.00$ 38,750.00$

2. Cash in (Total) -$ -$ 50,000.00$

Sales by cash -$ -$ 50,000.00$

Sales 2 weeks credit -$

Sales 3 weeks credit

3. Cash out (Total) 300.00$ 60,950.00$ 300.00$

Rent office 300.00$ 300.00$ 300.00$

Purchases computers 60,000.00$

Pay an insurance 650.00$

Pay wages

4. Net Cash flow (=Total Cash in-Total cash out) (300.00)$ (60,950.00)$ 49,700.00$

5. Closing balance (=(1)+(4)) 99,700.00$ 38,750.00$ 88,450.00$

Chart 3: Profit Statement

Week1 Week2 Week3

Turn over -$ -$ 70,000.00$

Cost for goods sold -$ 60,000.00$ -$

Over head 300.00$ 950.00$ 300.00$

Profit (300.00)$ (60,950.00)$ 69,700.00$

Total Profit 143,850.00$

The computer business

Week4 Week5 Week6 Week7 Week8 Week9 Week10

200.00$ -$ 200.00$ -$ 200.00$ -$ 200.00$

20.00$ 30.00$ 50.00$ 30.00$ 40.00$

50.00$ 50.00$ 80.00$ 60.00$ 20.00$

160.00$ 80.00$ 280.00$ 200.00$ 350.00$ 260.00$ 400.00$

Week4 Week5 Week6 Week7 Week8 Week9 Week10

88,450.00$ 8,150.00$ 57,850.00$ (44,950.00)$ 4,750.00$ 14,450.00$ 44,150.00$

20,000.00$ 50,000.00$ -$ 50,000.00$ 100,000.00$ 30,000.00$ 120,000.00$

20,000.00$ 30,000.00$ -$ -$ 50,000.00$ 30,000.00$ 40,000.00$

-$ 20,000.00$ -$ -$ -$ -$ -$

-$ -$ -$ 50,000.00$ 50,000.00$ -$ 80,000.00$

100,300.00$ 300.00$ 102,800.00$ 300.00$ 90,300.00$ 300.00$ 300.00$

300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$

100,000.00$ 100,000.00$ 90,000.00$

2,500.00$

(80,300.00)$ 49,700.00$ (102,800.00)$ 49,700.00$ 9,700.00$ 29,700.00$ 119,700.00$

8,150.00$ 57,850.00$ (44,950.00)$ 4,750.00$ 14,450.00$ 44,150.00$ 163,850.00$

Week4 Week5 Week6 Week7 Week8 Week9 Week10

70,000.00$ 80,000.00$ -$ 80,000.00$ 50,000.00$ 90,000.00$ 60,000.00$

100,000.00$ -$ 100,000.00$ -$ 90,000.00$ -$ -$

300.00$ 300.00$ 2,800.00$ 300.00$ 300.00$ 300.00$ 300.00$

(30,300.00)$ 79,700.00$ (102,800.00)$ 79,700.00$ (40,300.00)$ 89,700.00$ 59,700.00$

1 month credit

Market Mike

Month 1 2 3 4

1. Opening balance (750.00)$ (780.00)$ (820.00)$ (1,560.00)$

2. Cash in (Total) 1,480.00$ 1,530.00$ 1,730.00$ 1,670.00$

Sales 1,480.00$ 1,530.00$ 1,580.00$ 1,670.00$

Sales old stall 150.00$

3. Cash out (Total) 1,510.00$ 1,570.00$ 2,470.00$ 1,960.00$

Purchases 890.00$ 1,040.00$ 1,190.00$

Payable 830.00$

Personal drawings 500.00$ 500.00$ 500.00$ 500.00$

Purchases new stall 750.00$

Rent of the market stall patch 180.00$ 180.00$ 180.00$ 270.00$

Total cash out:

4. Net Cash flow (=Total Cash in-Total cash out) (30.00)$ (40.00)$ (740.00)$ (290.00)$

5. Closing balance (=(1)+(4)) (780.00)$ (820.00)$ (1,560.00)$ (1,850.00)$

5 6

(1,850.00)$ (2,120.00)$

1,760.00$ 2,140.00$

1,760.00$ 2,140.00$

2,030.00$ 2,120.00$

1,260.00$ 1,350.00$

500.00$ 500.00$

270.00$ 270.00$

(270.00)$ 20.00$

(2,120.00)$ (2,100.00)$

loan form bank this number from 1st month

Chart 1 : purchase,stock and sales

Week1 Week2 Week3

Purchases 0 100 0

Sales 0 0 70

Stock 0 100 30

profit 1 product 0

Chart 2: Cash flow statement

Week1 Week2 Week3

Opening $100,000 $99,700 $38,750

Sales 0 0 $50,000

Cost $300 $60,950 $300

Closing $99,700 $38,750 $88,450

Chart 3: Profit Statement

Week1 Week2 Week3turn over $0 $0 $70,000cost for goods sold $0 $0 $42,000Over head $300 $950 $300

Profit ($300) ($950) $27,700

$233,850

The computer business

Week4 Week5 Week6 Week7 Week8

200 0 200 0 200

70 80 0 80 50

160 80 280 200 350

Week4 Week5 Week6 Week7 Week8

$88,450 $8,150 $57,850 ($44,950) $4,750

$20,000 $50,000 0 $50,000 $100,000

$100,300 $300 $102,800 $300 $90,300

$8,150 $57,850 ($44,950) $4,750 $14,450

Week4 Week5 Week6 Week7 Week8$70,000 $80,000 $0 $80,000 $50,000$38,000 $40,000 $0 $40,000 $25,000

$300 $300 $2,800 $300 $300

$31,700 $39,700 ($2,800) $39,700 $24,700

Week9 Week10

0 200

90 60

260 400

Week9 Week10

$14,450 $44,150 $163,850

30000 $120,000

$300 $300 120300

$44,150 $163,850 $43,550

Week9 Week10$90,000 $60,000$45,000 $30,000

$300 $300

$44,700 $29,700

Month -3 -2

Sales forecast

Assembled forecast 10 30

Materials 10,000.00$

Labour 2,000.00$

Overheads 100,000.00$

Cost of each car 12,000.00$

Selling price 25,000.00$

Cash flow forecast

Month 1 2

1. Opening balance 1,000,000.00$ (4,520,000.00)$

2. Cash in (Total) -$ -$

Sales 2 months credit

3. Cash out (Total) 5,520,000.00$ 11,400,000.00$

Parts and materials 5,100,000.00$ 10,000,000.00$

Labour 20,000.00$ 1,000,000.00$

Overheads 400,000.00$ 400,000.00$

4. Net Cash flow (=Total Cash in-Total cash out) (5,520,000.00)$ (11,400,000.00)$

5. Closing balance (=(1)+(4)) (4,520,000.00)$ (15,920,000.00)$

Profit forecast

Month 1 2

Turn over 250,000.00$ 750,000.00$

4.Ecocity Cars Ltd

Cost for goods sold 120,000.00$ 360,000.00$

Over head 400,000.00$ 400,000.00$

Profit (270,000.00)$ (10,000.00)$

Total Profit 21,520,000.00$

6 months of sales

-1 1 2 3 4 5

10 30 100 200 500

100 200 500 1,000 1,200 1,400

3 4 5 6

(15,920,000.00)$ (30,070,000.00)$ (46,120,000.00)$ (62,820,000.00)$

250,000.00$ 750,000.00$ 2,500,000.00$ 5,000,000.00$

250,000.00$ 750,000.00$ 2,500,000.00$ 5,000,000.00$

14,400,000.00$ 16,800,000.00$ 19,200,000.00$ 3,600,000.00$

12,000,000.00$ 14,000,000.00$ 16,000,000.00$ -$

2,000,000.00$ 2,400,000.00$ 2,800,000.00$ 3,200,000.00$

400,000.00$ 400,000.00$ 400,000.00$ 400,000.00$

(14,150,000.00)$ (16,050,000.00)$ (16,700,000.00)$ 1,400,000.00$

(30,070,000.00)$ (46,120,000.00)$ (62,820,000.00)$ (61,420,000.00)$

3 4 5 6

2,500,000.00$ 5,000,000.00$ 12,500,000.00$ 25,000,000.00$

1,200,000.00$ 2,400,000.00$ 6,000,000.00$ 12,000,000.00$

400,000.00$ 400,000.00$ 400,000.00$ 400,000.00$

900,000.00$ 2,200,000.00$ 6,100,000.00$ 12,600,000.00$

6 7 8 9 Total

1,000 1,200 1,400 1,600 6,040

1,600 - - 6,040