Good cash management is impossible without an analysis of the cash collections and cash disbursements of a company. Cash budgets provide a gauge for determining credit, disbursement, and discount policies. Cash budgets are effective control devices for monitoring cash and determining financing requirements.
Cash budgets are essential to all small businesses. In this assignment, you are required to do the following:
Develop a spreadsheet with a cash budget with lagging collections
Determine the net cash flows for the year
Forecast the cumulative dollar amount of the external financing required for the year
You are also required to prepare a 3-page analysis of the results of your cash budget.
Middletown Construction, Inc. has estimated the following sales forecast over the next 12 months (they close in the winter):
January$0February$0March$275,000April$275,000May$312,000June$417,000July$714,000August$611,000September$827,000October$500,000November$116,000December$0
The company also gathered the following collection estimates regarding the forecast sales:
Payment collection within the month of sale = 20%
Payment collection the month following sales = 60%
Payment collection the second month following sales = 20%
Payments for raw materials and labor costs are paid the month after the purchase and are estimated as follows:
March$220,000April$240,000May$225,000June$287,000July$350,000August$415,000September$242,000October$214,000November$222,000
Additional financial information is as follows:
Administrative salaries will approximately amount to $30,000 a month.
Lease payments are around $10,000 a month.
A one-time new plant investment for $23,000 is expected to incur and be paid in June.
Income tax payments estimated to be around $50,000 will be due in both June and September.
Miscellaneous costs are estimated to be around $5,000 a month.
Cash on hand on March 1 will be around $50,000, and a minimum cash balance of $50,000 shall be on hand at all times.
To receive full credit on this assignment, please show all work, including formulas and calculations used to arrive at the financial values.
Prepare a monthly cash budget for Middletown Construction, Inc. for the 12-month period of January through December.
Use Excel to prepare the monthly cash budget with the use of this template.
Based on your cash budget findings, answer the following questions in a 3-page analysis:
Will the company need any outside financing?
When is the line of credit the highest for MCI will need?
If you were a bank manager, would you want MCI as your client? Why or why not?
Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell.
In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.
God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.
Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.
To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.
References
Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.
Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.
Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.
Sample Answer
Sample Answer
Cash Budget Analysis for Middletown Construction, Inc.
Cash Budget Spreadsheet:
Month Sales Forecast Collections Raw Materials & Labor Costs Net Cash Flow
January $0 $0 $0 -$0
February $0 $0 $0 -$0
March $275,000 $55,000 (20%) $220,000 $-185,000
April $275,000 $165,000 (60%) $240,000 -$75,000
May $312,000 $62,400 (20%) $225,000 $87,400
June $417,000 $250,200 (60%) $287,000 -$36,800
July $714,000 $428,400 (60%) $350,000 $78,400
August $611,000 $122,200 (20%) $415,000 -$307,800
September $827,000 $496,200 (60%) $242,000 $254,200
October $500,000 $100,000 (20%) $214,000 $-114,000
November $116,000 $23,200 (20%) $222,000 -$123,800
December $0 $0 $0 -$0
Net Cash Flows for the Year:
– Total Cash Inflows: $1,702,200
– Total Cash Outflows: $1,744,000
– Net Cash Flow for the Year: -$41,800
Forecasted External Financing Required:
– Cumulative Dollar Amount of External Financing Required for the Year: $41,800
Cash Budget Analysis:
Middletown Construction’s cash budget analysis reveals several key insights:
1. Seasonal Sales Impact: The company experiences varying sales volumes throughout the year, with peak sales in the summer months (July and August) and lower sales in the winter months. This seasonality impacts cash flows and necessitates effective cash management strategies to address fluctuations.
2. Cash Collection Patterns: The collection estimates indicate that a significant portion of sales revenue is received in the month following the sale (60%), with the remainder spread over the subsequent months. Understanding these collection patterns is crucial for managing working capital and ensuring sufficient liquidity to cover operating expenses.
3. Raw Materials and Labor Costs: Payments for raw materials and labor costs are incurred the month after the purchase. This timing misalignment between cash inflows from sales and outflows for expenses underscores the importance of cash budgeting to anticipate financing requirements and maintain cash flow stability.
4. External Financing Requirement: The net cash flow for the year indicates a deficit of $41,800, highlighting the need for external financing to cover operational expenses during periods of negative cash flow. Securing external financing sources such as lines of credit or short-term loans can help bridge cash flow gaps and support business operations during lean months.
In conclusion, developing and analyzing a cash budget is essential for small businesses like Middletown Construction to effectively manage cash flow, monitor financial performance, and plan for financing needs. By proactively addressing cash collection and disbursement patterns, businesses can optimize liquidity management and ensure financial stability throughout the year.
