HCMG/750 HCMG750 HCMG 750 WEEK 4 CASE STUDY
- Davenport University / HCMG 750
- 31 Aug 2017
- Price: $30
- Other / Other
HCMG 750 WEEK 4 CASE STUDY
Week 4 Case #2
Cash flow exercise
Joseph Pharmacy had sales of $25,000 in December and $30,000 in January. The company expects sales of $20,000 in February and $40,000 in both March and April, and $30,000 in May. The company has no other source of cash inflows. Half of the sales are paid for with cash. Twenty-five percent are paid for in each of the two months following the sale.
Joseph Pharmacy has the following expenses: (show all of your work) and submit in APA format. Title page, introduction and conclusion apply here.
- Monthly rent of $1,500
- Wages of $5,000 each month
- Purchases
- 50% of next month’s sales
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- Cash Outlay
- 20% in month purchased
- 80% in the previous month
From the information provided:
- 1. Calculate the projected Cash Receipts for the three months of February, March, and April (Tables have been set up for you)
A Schedule of Projected Cash Receipts for Joseph Pharmacy (25 points)
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Sales forecast |
December |
January |
February |
March |
April |
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Cash Sales |
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Collection of AR: Lagged 1 Month Lagged 2 Months |
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Other Cash Receipts |
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Total Cash Receipts |
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- 2.Calculate the projected Cash Disbursements for the same months
A Schedule of Projected Cash Disbursements for Joseph Pharmacy (30 points)
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Sales |
December
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January
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February
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March
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April
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Purchases (50% of next month’s sales) Current month (.20) Lagged 1 month (.80)
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Rent payments |
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Wages/Salaries |
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Total |
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- Indicate what the total cash balance would be at the end of these three months if the cash balance at the beginning of February was $1,500. (30 points)
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February Cash balance |
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Total Cash Receipts |
December
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January
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February
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March
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April
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Cash Disbursements |
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Balance |
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Balance from Feb - April |
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- Define cash inflows and cash outflows 10 points
- If I have a budget where expected gross receipts are what is obtained in #1 and my expected cash disbursements are what is obtained in #2. What can you tell me about the cash balance (obtained in #3) if you were doing a variance analysis? How would you attempt to explain the variance? 10 points
- What is a cash budget, a flexible budget, CAPEX, and OPEX? 10 points
- How often do you use some form of budgeting? Why? 10 points
- If the business world is allowed to explain away their variances to budget, why is budgeting so important? 10 points
- Title page, introduction, conclusion, APA format, grammar, and sentence structure (15 points)
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