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    Case ToolKit

    Uploaded by

    Henry Wang
    This document summarizes a case study about Chef's Toolkit Inc., a company founded by Peter and Sally Jeffery to manufacture and market a new pasta server invention. The case examines the company's cash budgeting needs as it seeks financing from potential investor Dale Reid. Key points analyzed include the company's background, production schedule, cash budget, pro-forma financial statements, and break-even calculations. Ultimately, the company's product sales fell below projections and it was forced to declare bankruptcy.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Case ToolKit

    Uploaded by

    Henry Wang
    492 views21 pages
    This document summarizes a case study about Chef's Toolkit Inc., a company founded by Peter and Sally Jeffery to manufacture and market a new pasta server invention. The case examines the company's cash budgeting needs as it seeks financing from potential investor Dale Reid. Key points analyzed include the company's background, production schedule, cash budget, pro-forma financial statements, and break-even calculations. Ultimately, the company's product sales fell below projections and it was forced to declare bankruptcy.

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    Case ToolKit

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    This document summarizes a case study about Chef's Toolkit Inc., a company founded by Peter and Sally Jeffery to manufacture and market a new pasta server invention. The case examines the company's cash budgeting needs as it seeks financing from potential investor Dale Reid. Key points analyzed include the company's background, production schedule, cash budget, pro-forma financial statements, and break-even calculations. Ultimately, the company's product sales fell below projections and it was forced to declare bankruptcy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    492 views21 pages

    Case ToolKit

    Uploaded by

    Henry Wang
    This document summarizes a case study about Chef's Toolkit Inc., a company founded by Peter and Sally Jeffery to manufacture and market a new pasta server invention. The case examines the company's cash budgeting needs as it seeks financing from potential investor Dale Reid. Key points analyzed include the company's background, production schedule, cash budget, pro-forma financial statements, and break-even calculations. Ultimately, the company's product sales fell below projections and it was forced to declare bankruptcy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 21

    Case Three

    CHEFS TOOLKIT INC.


    Cash Budgeting

    Case Explanation: cash budgeting

    History: Jefferys, invention of Pasta server


    Production: data
    Marketing: data
    Financial Implication: data
    Data: Composition of Canadian Households;
    Balance sheet(July 15, 1994)
    Jefferys Personal balance sheet (July 15, 1994)
    Production Schedule in Unit
    2

    Study Questions
    Q1What is the Case? (1)event?(2)Companies?(3)Persons?(4)Time? What
    is the problem?(5)Why is the problem?(6)Possible Solutions?
    Q2Analyses (1) Background of Chefs Toolkit Inc.
    ? (2) CV of managers? (3)What is the invention? (4)Company Size-up:
    production, marketing, and financial status?
    Q3Budgeting(monthly sales : 10,000; 5,000; 30,000): production
    schedule, cash budget, Pro-forma income statement, Pro-forma balance
    sheet
    Q4How can the firm avoid loss? Break even calculation?
    Q5: How much money do the firm need for financing? Should Dale Raid
    invest? What are his risks?
    3

    Case Summary
    M r. P eter
    Jeffery

    M r. Dale Reid
    Private Investor

    President of

    Chefs Toolkit
    Inc.

    Obtain funds to start manufacturing and


    marketing a new pasta server.

    Case Summary
    Sell

    Produce

    Chefs Toolkit Inc.

    Pasta Server

    Chef or Housewife

    Objectives

    Produce projected income


    statements, balance sheets,
    and cash flow statement up
    to July 31, 1995.
    Obtain fund from Dale Reid.

    Why Budget?

    If you know where you are going,


    youre more likely to get there.

    Plan
    Perform
    Evaluate
    Report
    7

    Preparation of the Budget for a Manufacturing


    Organization

    Preparation of the Cash Budget for Chefs Toolkit


    Inc.
    Production Schedule

    Cash Budget

    Pro-forma income statement

    Pro-forma balance sheet

    Analyses

    Background of Chefs Toolkit Inc. ()


    CVs of Peter and Sally Jeffery ()
    Invention: Pasta Server ()
    Production()
    Marketing()
    Financial Status()
    Budgeting()

    10

    Financial Status()

    Dale Reid: invest $85,000 for 50 percent of


    ownership.()
    Jefferys: can not invest any more personal
    funds.
    Monthly Sales(): 10,000 unit,
    5,000 unit, 30,000 units.

    11

    Budgeting()

    Prepare a monthly production schedule


    Prepare a monthly cash budget
    Prepare income statement
    Prepare balance sheets
    Fiscal year-end: July 31, 1995

    12

    Monthly production schedule(


    )

    Beginning Inventory Total


    +Production
    -Sales
    -Promotion
    End Inventory Total
    -Home
    Warehouse
    13

    Direct Material Budget


    Units x Direct Materials costx

    14

    The Cash Budget

    The Cash Budget is a projection of the cash


    an organization will receive and the cash it
    will pay out.
    Shall we consider the depreciation?

    15

    Cash Budgets
    Cash Receipts
    -Cash Disbursements
    Change in Cash
    +Beginning Cash
    Net Cash Flow
    Required Financing:
    Beginning
    - Net Cash Flow
    Financing Shortfall

    16

    Pro-forma income statement

    Reports on profitability of business

    Revenues

    minus

    Expenses

    equals

    Net income

    If expenses >
    revenue = net
    loss

    17

    Pro-forma balance sheet

    Reports the entitys assets, liabilities, and owners


    equity as of a specific date
    Balance

    Assets

    Sheet
    Liabilities
    Equity

    18

    Do it using Excel
    Monthly Sales: 5,000 unit
    Monthly Sales: 30,000 units
    a larger production mold.
    - Capital cost: $62,000, payable in three
    monthly installments.;
    - Double production capacity;
    - $0.35 per unit costs
    - Depreciation: $0.062 per unit
    - Inventory: $0.848 per unit
    How can the firm avoid loss?

    19

    Break-even Calculations (

    20

    What Happened

    The Jeffery received $75,000 in


    financing from Dale Reid.
    Product Sales in the first two years
    were below the 10,000 unit level.
    The firm filed for bankruptcy.

    21

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