Question

KING KARS

You begin the year with a cash balance of $50,000, and the minimum cash balance desired must be $50,000 every month. Prepare a cash ow summary and external financing summary as noted in Excel spreadsheet.


JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER

GIVEN: MONTHLY NET CASH GAIN OR LOSS $5,000 $(30,000) $20,000 $(35,000) $25,000 $(10,000) $25,000 $25,000 $(30,000) $15,000 $15,000 $25,000

JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
CASH FLOW SUMMARY

1. Cash balance at start of month
2. Net cash gain (loss) during month
3. Cash bal. at end of month (before financing)
4. Minimum cash balance desired
5.   Surplus cash (OR) Deficit cash (Line 3 – Line 4)

EXTERNAL FINANCING SUMMARY

6. External financing balance - start of month
7. New financing req'd (negative of Line 5) (if deficit!)
8. Financing repayments (if surplus!)
9. Ext financing balance – end of month
10.Cash bal. at end of mo (Line3 + Line7 + Line8)

Do you believe that the company needs outside financing?

What is the minimum line of credit to request from a lender?

Do you think you are a good candidate for the line of credit?Why!

Answer 1