1. Information Management & Financial Analysis for HR Managers
Seminar TEN:
Cash Budget Revision Exercise

2. Activity: Prepare a Cash Budget for Jan, Feb and March
Travis is a retail business selling goods to customers by cash and credit terms. Budgeted Cash information is as follows:
All £ (000)
Oct
Nov
Dec
Jan
Feb
Mar
Credit Sales
300
400
250
320
280
Cash Sales
160
120
125
175
180
190
Credit Purchases
220
260
Other Operating Costs
135
170
185
75% of Credit Sales are paid in the following month, 10% is paid on 2 months, 12% is paid after 3 months and the remainder is written off as bad debt
65% of Credit Purchases are paid the month after purchase, the remainder is paid 2 months after purchase
All operating costs are paid in the month to which they occur
Travis has placed an order for new IT equipment worth £60,000. Scheduled payment is February
The Cash balance on the 1st January is £40,000

3. Activity: Prepare a Cash Budget for Jan, Feb and March
Credit Sales Receipts
All £ (000)
Total Sales
Jan
Feb
Mar
October
300 36
November
400 40 48
December
250
187.5 25 30
January
320
240 32
February
Total
263.5
313
302

4. Activity: Prepare a Cash Budget for Jan, Feb and March
Credit Purchases Payments
All £ (000)
Total Purchases
Jan
Feb
Mar
November
220 77
December
260
169 91
January
250
162.5
87.5
February
Total
246
253.5

5. Activity: Prepare a Cash Budget for Jan, Feb and March
Solution: Cash Budget
All £ (000)
Jan
Feb
Mar
Cash Sales
175
180
190
Receipts from Credit Sales
263.5
313
302
Total Receipts
438.5
493
492
Payments for Purchases
(246)
(253.5)
(250)
Expenses Paid
(175)
(170)
(185)
IT Equipment Payment
(60)
Total Payments
(421)
(483.5)
(435)
Net Cash
17.5
9.5 57
Opening Balance 40
57.5 67
Closing Balance
124