April-June 1986
July-Sept 1986
Cash
100
100
Receivables,net
507
4580
Inventories
2808
1690
Prepaid Expenses
241
294
Total current assets
3656
6664
Fixed Assets Plant, property, and equipment
3570
3808
Less Accumulated Depreciation
1398
1564
Net fixed assets
2172
2244
Other Assets
201
247
Total Assets
6029
9155
Accounts Payable
1849
1717
Notes Payable - bank
2176
3727
0
0
980
1060
Current Assets
1
Liabilities
Income tax payable
Current installment - long-term debt
Total current liability
5005
6504
Long Term Debt
-
-
Term Loan
-
-
5005
6504
Common Stock
1249
1249
Additional capital
105
105
Retained Earnings
-330
1297
Total stockholder's Equity
1024
2651
Total L+OE
6029
9155
Total Liability
Stockholder's Equity
Notes payable calculated for each quarter of FY 1987 from Exhibit 4 is Quarter 1 Quarter 2 Notes payable—banks 2176 3727
The Notes Payable are less, therefore the company's plan is Feasible
2
Quarter
1 2 3 4
70% of Inventory 1965600 1183000 816200 1308300
For the First Quarter:70% of inventory = $1,965,600.
80% of Acct Receivables 507000 3664000 3791200 1392800
80% of (Account Receivable) $507,000 = $405,600. $1,965,600 + $405,600 = $2,371,200 > Notes Payable needed $2,176,000 Hence the company has sufficient amount of money for this quarter.
For the Second Quarter:70% of inventory $1,183,000. 80% of (Account Receivable) $3,664,000 $1,183,000 + $3,664,000 = $4,847,000 > Notes Payable needed $3,727,000. Hence the company has sufficient amount of money for this quarter.
For the Third Quarter:70% of inventory $816,200. 80% of (Account Receivable) $3,791,200 $816,200 + $3,791,200 = $4,607,400 > Notes Payable needed $3,041,000. Hence the company has sufficient amount of money for this quarter. For the Fourth Quarter:70% of inventory $1,308,300. 80% of (Account Receivable) $1,392,800 $1,308,300 + $1,392,800 = $2,701,100 > Notes Payable needed $1,650,000. Hence the company has sufficient amount of money for this quarter.
3
As per Balance Sheet Analysis, Account Receivables get Accumulated for Quarter 2 and Qu The current ratio for Quarter 1 is <1, Quarter 2 is >1, Quarter 3 is >1 and Quarter 4 is >1. Company has almost the healthy current asset to manage current Liabilities. However, with high Account Receivables in few Quarters can cause cash crunch and force Quarter 1
Quarter 2
100 507
100 4580
2,808
1,690
241
294
Current Assets
Cash Receivables, net Inventories Prepaid expenses
Total current assets
3,656
6,664
Plant, property, and equipment
3570
3808
Less accumulated depreciation and amortization
1398
1564
Total net fixed assets
2172
2244
Other assets
201
247
Total Assets
6,029
9,155
1,849
1,717
Fixed Assets
Liabilities
Accounts payable Notes payable — banks
Income taxes payable
Current installments — long-term debt
Total current liabilities
2176
3727
0
0
980
1,060
5005
6504
Long-term debt
Term loan
0
Notes payable to banks
0
0
Total
0
0
0
1,249
1,249
Additional paid-in capital
105
105
Retained earnings (deficit)
-330
1297
Total stockholders' equity
1024
2651
Total Liabilities & Equities
6029
9155
Stockholders' Equity:
Common stock
4
Third Quarter FY 1987 Cash Budget by Months ($000)
Cash receipts Cash outflow For materials, labor, and operating expen Interest Capital expenditures Pay back stockholder loans
October $1,000
830 54 69 0
November $1,054
1,065 56 62 841
Collateral for bank loans at end of month Receivables Inventory Notes Payable
5,420 1,331 $3,680
Monthly distribution of 3rd quarter of FY 1987 using exhibit 5 931700 Oct 954100 Nov 816200 Dec
5,517 1,363 $4,650
4336000 4413600 3791200
The cash budget of November clearly shows that company will not be able to pay the stockh because it exceeds the maximum limit of loan available. Hanson can distribute the stockholder's loan repayment to Sept, Oct and Nov in order to rep
Oct-Dec 1986
Jan-Mar 1987
100
100
4739
1741
1166
1869
198
283
6203
3993
3987
4288
1743
1938
2244
2350
283
302
8730
6645
1755
1664
3041
1650
0
0
207
189
5003
3503
-
-
-
-
5003
3503
1249
1249
105
105
2373
1788
3727
3142
8730
6645
Quarter 3 3041
Quarter 4 1650
Total Collateral 2472600 4847000 4607400 2701100
Notes Payable Needed Feasible 2176000 Yes 3727000 Yes 3041000 Yes 1650000 Yes
arter 3.
ompany to borrow. Quarter 3
Quarter 4
100 4739
100 1741
1,166
1,869
198
283
6,203
3,993
3987
4288
1743
1938
2244
2350
283
302
8,730
6,645
1,755
1,664
3041
1650
0
0
207
189
5003
3503
0
0
0
0
0
0
1,249
1,249
105
105
2373
1788
3727
3142
8730
6645
December $2,518
803 58 48 0
4,739 1,166 $3,041
5267700 5367700 4607400
3680000 Yes 4650000 No 3041000 Yes
older's loan on time using the bank loan.
ay it by November.
