Evaluate the case scenario:
The expected sales are 100,000$ during the next three months. It will make monthly purchases of 60,000$ during this time. Wages and salaries are 10,000$ per month plus 5% of the sales. The company expects to make a tax payment of 20,000$ in the first month, a 15,000$ purchase of fixed assets the second month and to receive 8,000$ in cash from the sale on an asset in the third month. All sales and purchases are for cash. Beginning cash and the minimum cash balance are assumed to be zero.
Because the company is unsure of the sales levels during this period, there is some concern over cash balance from month to month. As the financial manager, it is your responsibility to prepare a cash budget for the next three months. Also, briefly discuss how you can use this information to evaluate the cash needs of the company and any funding decisions needing to be made.