Triad Campers

Pro forma Profit & Loss Statement

% July August September
Forecasted sales __----- $204,000 $223,000 $240,000
Less : Cost of Goods Sold 62% (126,480) (138,260) (148,800)
Gross profit _-----_ $77,520 $84,740 $91,200
Less : General &
8.8% (17,952) (19,624) (21,120)
Administrative Expenses
Depreciation Unchanged (14,430) (14,430) (14,430)
Interest Unchanged (7,917) (7,917) (7,917)
Income before Taxes ----- $37,221 $42,769 $47,733
Less: Taxes ( 38%) 38% (14,144) (16,252) (18,139)
Net Income ----- $23,077 $26,517 $29,594
Question one
1. Calculate the cash flow budget and a pro forma a profit and loss statement for triad campers
for the coming July - September quarter.

Triad Campers
A Schedule of Projected Cash Receipts
% July August September
Forecasted sales __ $204,000 $223,000 $240,000
Cash sales 0% 0 0 0
Collections of A/R : __
March sales 13,471 0 0
April sales 111,525 17,844 0
May sales 0 124,350 19,896
June sales 0 0 137,700
July sales 20,400 0 0
August sales 0 22,300 0
September sales 0 0 24,000
Other cash receipts
Total cash receipts __ $145,396 $164,494 $181,596
 Triad Campers
A Schedule of Projected Cash Disbursements
% July August September
Forecasted sales __ $204,000 $223,000 $240,000
Purchases 32% (65,280) (71,360) (76,800)
Payments of A/P : __ 0 0 0
Salaries (4,200) (4,200) (4,200)
Wages 19.50% (39,780) (43,485) (46,800)
Direct Factory 4.90% (9,996) (10,927) (11,760)
Administration expenses (11,500) (12,000) (12,500)
Selling Expenses 7.8% (15,912) (17,394) (18,720)
Lease Payment (19,000) 0 0
Interest (7,917) (7,917) (7,917)
Tax Payment 0 0 (19,800)
Total cash disbursements __ ($173,585) ($167,283) ($198,497)

Triad Campers
Cash Flow Budget Statement
July August September
Total cash receipts $145,396 $164,494 $181,596
Less : Total cash
(173,585) (167,283) (198,497)
Disbursements
Net cash Flow ($28,189) ($2,789) ($16,901)
Add : Beginning Cash 72,000 43,811 41,022
Ending cash 43,811 41,022 24,121
Less : Minimum Cash
(15,000) (15,000) (15,000)
Balance
Excess Cash Balance 28,811 26,022 9,121

Question two.
How much increase in his line of credit will Tim need for the July –September
quarter? If the increase is not granted, what can Tim cook do?

Tim well not need to increase his line of credit of $60,000 during July –Sep
Quarter since he will face Excess cash projected.
Question three.
If sales are 20 percent greater than the July – September forecast, what would be the dollar effect on the
cash flow and the profit and loss statement?

Triad Campers
Pro forma Profit & Loss Statement
% July August September
Forecasted sales __ $244,800 $267,600 $288,000
Less : Cost of Goods Sold 62% (151,776) (165,912) (178,560)
Gross profit __ $93,024 $101,688 $109,440
Less : General &
8.8% (21,542) (23,549) (25,344)
Administrative Expenses
Depreciation Unchanged (14,430) (14,430) (14,430)
Interest Unchanged (7,917) (7,917) (7,917)
Income before Taxes __ $49,135 $55,792 $61,749
Less :Taxes ( 38%) 38% (18,671) (21,201) (23,465)
Net Income __ $30,463 $34,591 $38,284

Triad Campers
A Schedule of Projected Cash Receipts
% July August September
Forecasted sales __ $244,800 $267,600 $288,000
Cash sales 0% 0 0 0
Collections of A/R : __
March sales 13,471 0 0
April sales 111,525 17,844 0
May sales 0 124,350 19,896
June sales 0 0 137,700
July sales 24,480 0 0
August sales 0 26,760 0
September sales 0 0 28,800
Other cash receipts
Total cash receipts __ $149,476 $168,954 $186,396
 Triad Campers
A Schedule of Projected Cash Disbursements
% July August September
Forecasted sales __ $244,800 $267,600 $288,000
Purchases 32% (78,336) (85,632) (92,160)
Payments of A/P : __ 0 0 0
Salaries (4,200) (4,200) (4,200)
Wages 19.50% (47,736) (52,182) (56,160)
Direct Factory 4.90% (11,995) (13,112) (14,112)
Administration expenses (11,500) (12,000) (12,500)
Selling Expenses 7.8% (19,094) (20,873) (22,464)
Lease Payment (19,000) 0 0
Interest (7,917) (7,917) (7,917)
Tax Payment 0 0 (19,800)
Total cash disbursements __ ($199,779) ($195,916) ($229,313)

Triad Campers
Cash Flow Budget Statement
July August September
Total cash receipts $149,476 $168,954 $186,396
Less : Total cash
(199,779) (195,916) (229,313)
Disbursements
Net cash Flow ($50,303) ($26,962) ($42,917)
Add : Beginning Cash 72,000 21,697 (5,265)
Ending cash 21,697 (5,265) (48,182)
Less : Minimum Cash
(15,000) (15,000) (15,000)
Balance
Required total financing ($20,265) ($63,182)
Excess Cash Balance 6,697
Question four.
is sales are 30 percent less than the July –September forecast ,what will be the dollar
effect on the cash flow and the profit and loss statements?
Triad Campers
Pro forma Profit & Loss Statement
% July August September
Forecasted sales __ $142,800 $156,100 $168,000
Less : Cost of Goods Sold 62% (88,536) (96,782) (104,160)
Gross profit __ $54,264 $59,318 $63,840
Less : General &
8.8% (12,566) (13,737) (14,784)
Administrative Expenses
Depreciation Unchanged (14,430) (14,430) (14,430)
Interest Unchanged (7,917) (7,917) (7,917)
Income before Taxes __ $19,351 $23,234 $26,709
Less :Taxes ( 38%) 38% (7,353) (8,829) (10,149)
Net Income __ $11,997 $14,405 $16,560

Triad Campers
A Schedule of Projected Cash Receipts
% July August September
Forecasted sales __ $142,800 $156,100 $168,000
Cash sales 0% 0 0 0
Collections of A/R : __
March sales 13,471 0 0
April sales 111,525 17,844 0
May sales 0 124,350 19,896
June sales 0 0 137,700
July sales 14,280 0 0
August sales 0 15,610 0
September sales 0 0 16,800
Other cash receipts
Total cash receipts __ $139,276 $157,804 $174,396
 Triad Campers
A Schedule of Projected Cash Disbursements
% July August September
Forecasted sales __ $142,800 $156,100 $168,000
Purchases 32% (45,696) (49,952) (53,760)
Payments of A/P : __ 0 0 0
Salaries (4,200) (4,200) (4,200)
Wages 19.50% (27,846) (30,440) (32,760)
Direct Factory 4.90% (6,997) (7,649) (8,232)
Administration expenses (11,500) (12,000) (12,500)
Selling Expenses 7.8% (11,138) (12,176) (13,104)
Lease Payment (19,000) 0 0
Interest (7,917) (7,917) (7,917)
Tax Payment 0 0 (19,800)
Total cash disbursements __ ($134,295) ($124,333) ($152,273)

Triad Campers
Cash Flow Budget Statement
July August September
Total cash receipts $139,276 $157,804 $174,396
Less : Total cash
(134,295) (124,333) (152,273)
Disbursements
Net cash Flow $4,981 $33,471 $22,123
Add : Beginning Cash 72,000 76,981 110,452
Ending cash 76,981 110,452 132,575
Less : Minimum Cash
(15,000) (15,000) (15,000)
Balance
Required total financing
Excess Cash Balance 61,981 95,452 117,575
Question five.
In an attempt to encourage dealers to pay sooner, Tim offered terms on 2/10 net 90. Do
you find it surprising that only 10 percent of his customers took advantage of the
discount and paid within 10 days? Defend your answer.

No, I did not find it surprising since the New Plant produce around 1000 unit of campers which
mean that the sales price of one unit is around $200 and the discount is $20 and its not a big
amount to look after ,so most of buyers prefer to postponed the payment rather than take the
advantage of 10% discount .

Question sex.
Tim apparently thought that high profits guaranteed adequate cash to pay any bill as
they came due. Explain to Tim the difference between profit and cash flow. In particular,
explain how even a profitable, highly efficient firm can experience “cash crunches “and
have a need for outside capital

Profit Calculated under accrual method and if the collection cycle is longer than
Payment cycle firm should be able to finance its sales .and if sales grow to
some level with a limited line of credit to finance such growth firm will not have
enough cash to meet its short term obligations ( suppliers ) and will bankrupt.

Question seven.
Do you think that a cash budget is a more important financial tool for a small firm
like Tim‘s or a very large firm like general motors? Defend your position.

Cash Budget is important tool for both small and large firms but its has a vital role
at small firms since large firms usually has enough sources to meet its short-term
obligation and has the ability to get large finance to its operations and sales.