Finance Management Case Study solution for ABC LTD, MBA Graduates

1. ABC Ltd.
• For 2012
Sales = $6.0 million
The collection pattern of ABC is as follows
70% of the payment is realized in the month
of sales, 15% is received in the following
month and 10% is received in the second
month following the sales and 5% is never
collected

2. ABC Ltd.
• For 2011
Payment to the suppliers made after 30 days.
Every month’s inflow/outflow is independent
from other months’ because surplus of previous
month hasn’t been added to next month’s inflow.
The investment for all the positive cash flows
each month is invested fully in short term
securities and the interest is added to the next
month.
The credit period for the credit limit by the bank
is of one month.

3. ABC Ltd.
-200000
-100000
0
100000
200000
300000
400000
500000
1 2 3 4 5 6 7 8 9 10 11 12
Month
Monthly Cash Budget 2011
Cash Buget
Cash Bal with Credit

4. ABC Ltd.
-400000
-200000
0
200000
400000
600000
800000
1000000
1200000
Monthly Cash Budget 2012
Cash Bal
Cash Bal with Credit

5. ABC Ltd.