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Cash flow and financial planning.

Financial Management
Deliverable Length: 1 Excel Spreadsheet and a 1-2 page Word doc

Please read the relevant parts of your textbook, which refer to cash flow and financial planning.

To avoid any uncertainty regarding his business’ financing needs atthe time when such needs may arise, Cyrus Brown wants to develop acash budget for his latest venture: Cyrus Brown Manufacturing(CBM). He has estimated the following sales forecast for CBM overthe next 9 months:

March $250,000
April $275,000
May $320,000
June $450,000
July $575,000
August $700,000
September $825,000
October $350,000
November $285,000

He has also gathered the following collection estimates regardingthe forecast sales:

Payment collection within the month of sale = 10%
Payment collection the month following sales = 65%
Payment collection the second month following sales =25%

Payments for direct manufacturing costs like raw materials andlabor are made during the month that follows the one in which suchcosts have been incurred. These costs are estimated as follows:
March $187,500
April $206,250
May $240,000
June $337,500
July $431,250
August $525,000
September $618,750
October $262,500

Additional financial information is as follows:

Administrative salaries will approximately amount to $35,000 amonth.
Lease payments around $15,000 a month.
Depreciation charges, $15,000 a month.
A one-time new plant investment in the amount of $95,000 isexpected to be incurred and paid in June.
Income tax payments estimated to be around $55,000 will be due inboth June and September.
And finally, miscellaneous costs are estimated to be around $10,000a month.
Cash on hand on March 1 will be around $50,000, and a minimum cashbalance 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 financialvalues.

Project Guidelines:

Prepare a monthly cash budget for Cyrus Brown Manufacturing for the9-month period of March through November.
Use Microsoft Excel to prepare the monthly cash budget.
Based on your cash budget findings, answer the followingquestions:
Will the company need any outside financing?
What is the minimum line of credit that CBM will need?
What do you think of CBM’s cash position during the budget period?Do you see any concerns for the company in this regard?
If you were a bank manager, would you want CBM as your client? Whyor why not?
It is up to the members of the group to divide the assignment tasksevenly. You will be graded on group participation


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