PGBM01 - MBA Financial Management And Control (2015-16 Trm1 A)

1. PGBM 01 Financial Management &
Control Workshop 7
By
Andy Turton.
andy.turton@sunderland.ac.uk

2. Cash Receipts
Month 1 Month2 Month 3 Month 4 Month5 Month 6
Sales:
Fair Play 10,000 12,000 13,000 14,000
Dub. Conduct 5,600 8,400 9,800 11,200
Total 15,600 20,400 22,800 25,200
Cash Budget for first 6 months of trade

3. Cash Payments
Month 1 Month2 Month 3 Month 4 Month5 Month 6
Materials:
Fair Play 3,000 3,600 3,900 4,200 4,800
Dub. Conduct 2,000 3,000 3,500 4,000 5,000
Labour:
Fair Play 2,250 2,700 2,925 3,150 3,600 3,150
Dub. Conduct 1,800 2,700 3,150 3,600 4,500 3,150
Rent 4,000
Leasing 800 800 800 800 800 800
Marketing 1,000 1,000 1,000
Mgmt. Wages 2,000 2,000 2,000 2,000 2,000 2,000
Insurance 2,000
Total 13,850 14,200 16,475 16,950 19,100 18,900
Cash Budget for first 6 months of trade (cont.)

4. Cash Budget Summary
Month 1 Month2 Month 3 Month 4 Month5 Month 6
Cash b/fwd -13,850 -28,050 -28,925 -25,475 -21,775
Receipts 0 0 15,600 20,400 22,800 25,200
Payments 13,850 14,200 16,475 16,950 19,100 18,900
Cash c/fwd -13,850 -28,050 -28,925 -25,475 -21,775 -15,475
Cash Budget for first 6 months of trade (cont.)

5. The question states “he will be selling to retail chains who have asked for 60
days credit”. Therefore the demand associated with Month 1 will be turned into
cash in Month 3, demand for Month 2 will be turned into cash in Month 4 and so
on.
Month 3 Month 4 Month 5 Month 6
Fair Play 1,000 x £10 1,200 x £10 1,300 x £10 1,400 x £10
= £10,000 = £12,000 = £13,000 = £14,000
Dub. Conduct 400 x £14 600 x £14 700 x £14 800 x £14
= £5,600 = £8,400 = £9,800 = £11,200
Cash Receipts Supporting Calculations

6. The question states “he has managed to negotiate 30 days credit from his
material suppliers”. Therefore the materials associated with Month 1 production
will have a cash outflow in Month 2, the materials for Month 2 production will
have a cash outflow in Month 3 and so on.
Month 2 Month 3 Month 4 Month 5 Month 6
Fair Play 1,000 x £3 1,200 x £3 1,300 x £3 1,400 x £3 1,600 x £3
= £3,000 = £3,600 = £3,900 = £4,200 = £4,800
Dub.Conduct 400 x £5 600 x £5 700 x £5 800 x £5 1,000 x £5
= £2,000 = £3,000 = £3,500 = £4,000 = £5,000
 “Note that all other amounts are paid for in the month that they are incurred.”
Cash Payments Supporting Calculations