Question 1: Using the information provided, construct a monthly cash budget for October through December 2008. Based on your analysis, will Noble enjoy a surfeit of cash, or require external financing?
Question 2: Construct a pro forma income statement for the first fiscal quarter of 2009 and a pro forma balance sheet as of December 31, 2008. What is your estimated external financine needed for December 31?
Question 3: Does the December 31, 2008, estimated external financing equal your cash surplus (deficit) for this date from your cash budget?
Question 4: Based on your answers above, construct a cash flow forecast for Noble for the period October through December 2008.
Noble Selected Information and Financial Statements
Sales (20 percent for cash, the rest on 30-day credit terms):
| 2008 Actual |
|
|
2008 Projected |
|
|
| July |
August |
September |
October |
November |
December |
| 76,000 |
88,000 |
266,000 |
125,000 |
51,000 |
53,000 |
Purchases (all on 60-day terms):
| 2008 Actual |
|
|
2008 Projected |
|
|
| July |
August |
September |
October |
November |
December |
| 116,000 |
122,000 |
257,000 |
62,000 |
27,000 |
26,000 |
| Salaries payable monthly |
|
20,000 |
| Principal payment on debt due in December |
25,700 |
| Interest due in December |
|
9,000 |
| Dividend payable in December |
|
15,000 |
| Taxes payable in November |
|
19,000 |
| Addition to accumulated depreciation in December |
4,000 |
| |
|
|
|
|
| Cash balance on October 1, 2005 |
|
35,000 |
| Minimum desired cash balance |
|
15,000 |
Noble’s annual income statement and balance sheet for September 30, 2008 appear below.
Additional information about the company's accounting methods and expectations for the last three months of 2008 appear in the footnotes.
Noble
Annual Income Statement
Fiscal Year ended September 30, 2008 ($ 000)
|
|
|
|
| Net sales |
|
1,581.6 |
| Cost of goods sold1 |
1,098.0 |
| Gross profits |
|
483.6 |
| Selling and administrative expenses2 |
240.0 |
| Interest expense |
|
18.0 |
| Depreciation3 |
|
16.0 |
| Net profit before tax |
209.6 |
| Tax at 33% |
|
69.2 |
| Net profit after tax |
|
140.4 |
Noble
Balance Sheet
September 30, 2008 ($ 000)
| Assets |
|
|
| Cash |
|
34.0 |
| Accounts receivable |
212.8 |
| Inventory |
|
425.0 |
| Total current assets |
671.8 |
| Gross fixed assets |
|
135.0 |
| Accumulated depreciation |
52.0 |
| Net fixed assets |
|
83.0 |
| Total assets |
|
754.8 |
|
|
|
|
| Liabilities |
|
|
| Bank loan |
|
0.0 |
| Accounts payable |
|
379.0 |
| Accrued expenses4 |
55.0 |
| Current portion long-term debt5 |
25.7 |
| Taxes payable |
|
56.0 |
| Total current liabilities |
515.7 |
| Long-term debt |
|
120.0 |
| Shareholders' equity |
119.1 |
| Total liabilities and equity |
754.8 |
1. Cost of goods sold consists entirely of items purchased during the quarter.
2. Selling and administrative expenses consist entirely of salaries.
3. Depreciation is straight-line at the rate of $4,000 per quarter.
4. Accrued expenses are not expected to change in the last quarter.
5. $25.7 due December 2008. No payments for remainder of year.