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Cash Flow Service Projections Cash Flow Formal Wear Projections Cash Flow Analysis Template ScreenCast Video-Cash Flow Startup and November ScreenCast Video-Cash Flow December and January ScreenCast Video-Cash Flow February, March, April	Management is always concerned with having enough cash to meet its operating needs and to pay on any outstanding loans. Cash is the most liquid asset, and the efficient use of cash is one of the accounting department's most important tasks. Liquidity refers to the ability to pay debts as they come due. A cash flow statement is often prepared in order to give a full and complete picture of cash receipts and cash disbursements for an accounting period. Bromley's Tudedo Rentals Our start up cash is as follows. Our stockholders, the management of the company, invested a total of $85,000. Our loan was for $150,800 for a total cash balance of $235,000. Bromley's Tuxedo company then spent $150,800 on assets such as inventory of tuxedos, furniture and fixtures, supplies, etc leaving $85,000 worth of cash to start the month of November. Our next step is to look at our projected income statement for November. Our beginning cash balance is $85,000. Remember to look at our income statement for Bromley's Tuxedo Rentals. The amount of projected sales for November is $118,328. Remember that our VE contract for Salary expense is $83,328 of this. The additional $35,000 is our projected cash sales for our grand opening. Our total Cash received is now $203,328. We need to start paying on our loan of $150,800 Remember the terms of the loan were 10 years at 12% interest.The amount of the payment is $2,163.54 each month. For the month of November, $655.54. per month goes toward the principal and $1,508.00 goes toward the interest. Check out the income statement to see the interest expense. A cash flow analysis will show the payment of our loan and all of our expenses. We can get the expense amounts from the income statement shown on this page Loan payment on the principal is $655.54 for the month of November. Remember that the interest due on the laod is different each month. See you amoritization table for amounts for December through April. Salary Expense 83,328.00 Rent Expense 3,500.00 Repair Expense 50.00 Alterations 1,500.00 Dry Cleaning 8,514.00 Advertising 2,000.00 Supplies 150.00 Depreciation 0.00 Insurance Exp 750.00 Misc Exp 100.00 Payroll Taxes 8,957.70 Legal and Ac 0.00 Utilities Exp 1,875.00 Bad Debts Exp 0.00 Interest Exp 1,508.00 Total Exp 112,232.70 Depreciation expense is not an out of pocket expenditure and therefore, is not calculated in a cash flow analysis Add up all expenditures to get the total for November. To find the cash balance subtract the total expenditures from the total cash available (203,328-112,232.70). The cash balance at the end of November is $91,095.30. This amount, $91,095.30 becomes the cash on hand for December 1. Looking at December there a couple of changes. All of the expenses remain the same. Our Cash receipts do not include the sales amount from the Bakersfield trade fair. The money generated from these sales of $60,000 is not received at the time of the sale. When you get back from a trade fair, you need to issue invoices or bills to the people who bought goods or services from you. This money will not come in until you send them a bill. This amount is refered to as accounts receivable and will hopefully come in next month. In other words, you make the charge sale to people at the trade fair. Your books show the sale, but not the money received. That comes in next month after you have billed the customers. The ending cash balance from one month is the beginning cash balance for the next month. All sales are not cash sales. When you go to trade fairs most your sales are on account. That means that you when you get back from a trade fair, that you need to send an invoice (bill) to each student who purchased products or services from your company. The money then comes in the next month when your customers receive the invoice and then pay you. If you click on the link for cash flow analysis for a service business you can see a completed cash flow analysis for the months of November through April for Bromley's Tuxedo rentals. It is absolutely imperative that you collect the money owed to you from sales at trade fairs. Failure to do so would negatively impact your cash flow. If you do not have sufficient cash to meet your expenses and loan obligations, you will go broke. Bromley's Formal Wear Cash Flow Projections The procedure is basically the same for producing a cash flow statement for a merchandising business. Some of the expense acccounts, however, are different as well as the amounts. Look at the income statement for Bromley's Formal Wear to obtain the expenses. Purchases is a large expenditure each month. November $148,065.77 December $165,675.77 January $148,065.77 February $151,000.77 March $159,805.71 April $153,935.77 Interest on the loan changes each month. Look at your amoritization table for exact amounts for December-April. Even though most of our sales at trade fairs come from charge sales, we anticpiate some cash sales from visitors, judges and others with virtu-cash. Our goal is $52,000 of cash sales at the Bakersfield trade fair. If you click on "Cash Flow Formal Wear Projections", you will see these numbers. To help you with your own company's cash flow, you can click on "Cash Flow Analysis Template." Pur in your company's numbers. Remember to include any additional expenses.
Bromley's Tuxedo Rentals Income Statement For the period ending November 30 REVENUE Sales 118,328.00 Other Income Total Revenue 118,328.00 EXPENSES Salary Expense 83,328.00 Rent Expense 3,500.00 Repairs Expense 50.00 Alterations Expense 1,500.00 Dry Cleaning Expense 8,514.00 Advertising Expense 2,000.00 Supplies Expense 150.00 Depreciation Expense 3,268.12 Insurance Expense 750.00 Miscellaneous Expense 100.00 Payroll Taxes Expense 8,957.70 Legal And Accounting Utilities Expense 1,875.00 Bad Debts Expense Interest Expense 1,508.00 Delivery Expense Total Expenses 115,500.82 Net Profit 2,827.18	Bromley's Formal Wear Income Statement For the period ending November 30 REVENUE Sales Contract 132,241.53 Grand Opening 125,000.00 Total Revenue 257,241.53 COST OF MERCHANDISE SOLD Beginning Inventory 100,000.00 Purchases 148,065.77 Mdse Avail for Sale 248,065.71 Less End Invenory 97,054.94 Cost Of Goods Sold 151,000.77 Gross Profit 106,240.76 EXPENSES Salary Expense 83,328.00 Rent Expense 3,500.00 Repairs Expense 50.00 Alterations Expense 1,500.00 Advertising Expense 2,000.00 Supplies Expense 150.00 Depreciation Expense 491.12 Insurance Expense 750.00 Miscellaneous Expense 100.00 Payroll Taxes Expense 8,957.70 Legal And Accounting Utilities Expense 1,875.00 Bad Debts Expense Interest Expense 1,508.00 Delivery Expense Total Expenses 104,209.82 Net Profit 2,030.94
1. Which one listed below is the most liquid asset? Accounts Receivable Cash Inventory	2. The form used to give a full and complete picture of cash receipts and cash disbursements is called?. Income Statement Balance Sheet Cash Flow Analysis
3. Which expense is not an out-of-pocket expenditure? Salaries Rent Depreciation	4. To find the cash balance each month? Subtract total expenditures from total cash available Add total expenditures and total cash available Multiply salary expense by .587