Triad Campers

Triad Campers

* Cash flow budget:

Total Cash Receipts: $145,396 $164,494 $181,596

Pro forma profit and loss statement:

* Tim will not need to increase his line of credit for the July-September quarter, he will have excess of cash projected.

* If sales are 20% greater than the July-September forecast, the dollar effect on the cash flow and the profit and loss statements will be:

* If sales are 30% less than the July-September forecast, the dollar effect on the cash flow and the profit and loss statements will be:

* I do find it surprising that only 10 percent of customers took advantage of the 2/10 net 90 discount because personally I try to save as much money as possible, even if it is a small amount.

* Even a profitable, highly efficient firm can experience “cash crunches” and have a need for outside capital because if sales grow the company will need a line of credit to support short term obligations, such as an increase in amount owed to suppliers during this time. The difference between profit and cash flow is that profit is a result from cash flow, cash flow is a result of considering income and expenses used to determine profit.

* I think that a cash budget is a more important financial tool for a small firm like Tim’s than it is a very large firm like General Motors. Although cash flow is important for every firm, large firms have larger resources available to meet short term demands when it comes to operations and sales and can get a larger amount of financing than small firms can.