Medeival Company

Case
Fadhila Nurfida Hanif – SLEMBA
29320149
 Financial Data
Balance sheet
As of December 31
Assets
Cash $146.250 Price
Account receivable $68.750 Variable cost $35/unit
Inventory $35.000 Fixed cost $10.000
  $250.000 Sales $55/unit
Equities
Common stock $250.000
   
Retained earnings $0
  $250.000
 Data (Cont.)
Data of sales
Month Total Unit Total Sales Production
October     500
November 500 $27.500 750
December 750 $41.250 1000
January 1000 $55.000 1500
February 1500 $82.500 2000
March 2000 $110.000 2500
April 2500 $137.500 3000
May 3000 $165.000 3500
June 3500 $192.500 4000
July 4000 $220.000 4500
August 4500 $247.500 5000
September 5000 $275.000 5500
October 5500 $302.500 6000
 Question 1
Medeival Company
Monthly Cash Budget
   
Month Jan Feb Mar April May June July Aug Sept Oct
$146.25
1. Cash beg 0 $111.250 $72.500 $30.000 $0 $0 $0 $0  
2. Cash inflow  
$137.50 $165.00 $192.50 $220.00 $247.50
AR collections $27.500 $41.250 $55.000 $82.500 $110.000 0 0 0 0 0
Bank loans 0 0 0 $2.500 $22.500 $12.500 $2.500 $0 $0 $0
$150.00 $167.50 $192.50 $220.00 $247.50
Total cash inflow $27.500 $41.250 $55.000 $85.000 $132.500 0 0 0 0 0
$173.75 $115.00 $150.00 $167.50 $192.50 $220.00 $247.50
3. Cash available 0 $152.500 $127.500 0 $132.500 0 0 0 0 0
   
4. Cash outflow  
Fix cost $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000
$105.00 $140.00 $157.50 $175.00 $192.50 $210.00
Variable cost $52.500 $70.000 $87.500 0 $122.500 0 0 0 0 0
Repayment loan  
$115.00 $150.00 $167.50 $185.00 $202.50 $220.00
Total cash outflow $62.500 $80.000 $97.500 0 $132.500 0 0 0 0 0
   
$111.25
 Question 1 (Cont)
Conclusion of the monthly cash budget above:
• Company need extra funds in April until July and the total amount is
$40.000
• The loan begin repaid in August $7.500 and fully repaid in October
 Question 1 (Cont)
Projected Income Statement
   
Month Jan Feb March April May June July AugustSept Oct
$275.00 $302.50
Sales revenue $55.000 $82.500 $110.000 $137.500 $165.000 $192.500 $220.000 $247.500 0 0
$175.00 $192.50
Variable cost $35.000 $52.500 $70.000 $87.500 $105.000 $122.500 $140.000 $157.500 0 0
$100.00 $110.00
Marginal income $20.000 $30.000 $40.000 $50.000 $60.000 $70.000 $80.000 $90.000 0 0
Fixed cost $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000
$100.00
Profit/loses $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 $70.000 $80.000 $90.000 0
 Question 1 (cont)
Projected balance sheet
  Jan Feb March April May June July August Sept Oct
Assets  
Cash $111.250 $72.500 $30.000 $0 $0 $0 $0 $0 $0 $12.500
$247.50 $357.50 $412.50 $467.50 $522.50 $577.50
A/R $96.250 $137.500 $192.500 0 $302.500 0 0 0 0 0
$105.00 $140.00 $157.50 $175.00 $192.50 $210.00
Inventory $52.500 $70.000 $87.500 0 $122.500 0 0 0 0 0
$352.50 $497.50 $570.00 $642.50 $715.00 $800.00
Total Assets $260.000 $280.000 $310.000 0 $425.000 0 0 0 0 0
   
Liab + OE  
Bank Payable 0 0 0 $2.500 $25.000 $37.500 $40.000 $32.500 $15.000 $0
$250.00 $250.00 $250.00 $250.00 $250.00 $250.00
Common stock $250.000 $250.000 $250.000 0 $250.000 0 0 0 0 0
$100.00 $210.00 $280.00 $360.00 $450.00 $550.00
Retained Earning $10.000 $30.000 $60.000 0 $150.000 0 0 0 0 0
$352.50 $497.50 $570.00 $642.50 $715.00 $800.00
Total Liab + OE $260.000 $280.000 $310.000 0 $425.000 0 0 0 0 0
 Question 2
• The company has been paying its costs currently, but allowing customers two months to pay.
This, coupled with constant growth, causes large net operating outflows for several months,
which collectively eat up the firm's initial capital. The unit margin is $20 and the monthly
nonproduction costs are fixed at $10.000. The continued unit sales growth eventually (in August)
causes the current inflows (from sales two months ago) to exceed the current outflows. The firm
is profitable and eventually those profits get realized in cash.
• The company could have arranged credit with vendors to help finance the inventory and could
have been more aggresive in collecting from its customers in accord with the stated 30 day terms.
If the company delayed its payments by 30 days and accelerated receivable collections from 60 to
30 days, the operating cash flow would have turned positive in March and no cash crisis would
have occured.
 Question 3

  March May July

Net income $30.000 $50.000 $70.000
Increase in accounts receivable $55.000 $55.000 $55.000
Increase in inventory $17.500 $17.500 $17.500
Cash from operation -$42.500 -$22.500 -$2.500
Proceeds of debt 0 $22.500 $2.500
Cash increase/decrease -$42.500 $0 $0
Beginning of month cash balance $72.500 $0 $0
End of month cash balance $30.000 $0 $0