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Analysis of monthly cash budget of Cyrus Brown Manufacturing Company. - Essay Example
Author : braedenchamplin
Pages 4 (1004 words)
Annex 1 exhibits the projected financial statement of Cyrus Brown Manufacturing Company for 9 months and a Cash Flow Statement. From these statements, we can see the projected progress of sales of CBM for the 9 months period, and readily appreciate the data on its year end…
We will note from the income statement the net cash inflows from operations during the year after deducting the direct manufacturing costs and indirect expenses. As shown from the FS, the sales forecast for March and April are not sufficient to produce profit for the said months as expenses exceed projected sales. For the month of May, profit will be realized as projected sales have been increased. A substantial loss is seen for the month of June. A brief analysis of the data reveals that the loss is because of an investment made for plant structure and payment of taxes. The biggest sales forecast comes in September; however, it is also coupled with corresponding increase of expenses that includes second installment of payment of taxes; total expenses are 90% of sales. Accordingly, expected profit is reduced. There is a 42% drop in sales in October which is quite significant as it will also considerably affect the projected profit of the company and will reduce the cash receipts for the month. There is no explanation why the forecast of sales has gone down in October and November. TheTaxes have been deducted from the computations so the earnings that are shown in the balance are NET, that is no tax and interest have to be deducted. ...
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