UNDERSTANDING CASH FLOWS AND FINANCIAL PLANNING.
Authors Name
Institutional affiliation
ANSWERS:
• Will the company need any outside financing?
Cyrus Brown Manufacturing (CBM), will need outside financing for the two months in which there was a cash balance maintained of below $50,000.This months are April and May. Financing from outside may either be from loans or other means that the company may choose.
• What is the minimum line of credit that CBM will need?
In looking at the completed cash budget for CBM, the minimum line of credit can be determined. This amount is determined by viewing the external financial summary of the cash budget. Within this summary, it can be inferred that the minimum line of credit that CBM will need is $128,750. This would be the minimum line of credit as this is the greatest amount shown in the external financing balance at the end of the month.
• Cash Position During the beginning months of the cash budget, the cash position for CBM Company does not look to promising as significant amounts of external financing is needed. This poses concerns regarding the company as it has a negative cash flow, meaning that the cash outflows are greater than their inflows. However, in completing the cash budget we can see that this cash position changes to a positive one and the company is able to …show more content…
A bank could create a relationship with CBM and help the company’s cash position by helping them to manage collections and cash management. A bank manager will see potential in the company that can be improved through help from his bank. As a condition of loan acceptance, I would put safeguards in place which protects the Bank’s investment by insisting CBM change their payment schedule which would require them to hold funds of creditors longer in addition to making improvements in collections from
Authors Name
Institutional affiliation
ANSWERS:
• Will the company need any outside financing?
Cyrus Brown Manufacturing (CBM), will need outside financing for the two months in which there was a cash balance maintained of below $50,000.This months are April and May. Financing from outside may either be from loans or other means that the company may choose.
• What is the minimum line of credit that CBM will need?
In looking at the completed cash budget for CBM, the minimum line of credit can be determined. This amount is determined by viewing the external financial summary of the cash budget. Within this summary, it can be inferred that the minimum line of credit that CBM will need is $128,750. This would be the minimum line of credit as this is the greatest amount shown in the external financing balance at the end of the month.
• Cash Position During the beginning months of the cash budget, the cash position for CBM Company does not look to promising as significant amounts of external financing is needed. This poses concerns regarding the company as it has a negative cash flow, meaning that the cash outflows are greater than their inflows. However, in completing the cash budget we can see that this cash position changes to a positive one and the company is able to …show more content…
A bank could create a relationship with CBM and help the company’s cash position by helping them to manage collections and cash management. A bank manager will see potential in the company that can be improved through help from his bank. As a condition of loan acceptance, I would put safeguards in place which protects the Bank’s investment by insisting CBM change their payment schedule which would require them to hold funds of creditors longer in addition to making improvements in collections from