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Cash Budget Report

The report outlines the budgeted financial statements, including merchandise purchase budget, cash budget, budgeted income statement, and budgeted balance sheet, along with a CVP analysis. It indicates that while the company is profitable with a net profit of Rs. 341,300, it faces cash flow challenges and recommends increasing cash sales, optimizing inventory management, and ensuring timely loan repayments. The balance sheet shows total assets and liabilities/equity of Rs. 1,110,000.

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21 views3 pages

Cash Budget Report

The report outlines the budgeted financial statements, including merchandise purchase budget, cash budget, budgeted income statement, and budgeted balance sheet, along with a CVP analysis. It indicates that while the company is profitable with a net profit of Rs. 341,300, it faces cash flow challenges and recommends increasing cash sales, optimizing inventory management, and ensuring timely loan repayments. The balance sheet shows total assets and liabilities/equity of Rs. 1,110,000.

Uploaded by

pk0851641
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Cash Budget, Income Statement, and Balance Sheet

This report presents the budgeted financial statements, including merchandise purchase
budget, cash budget, budgeted income statement, and budgeted balance sheet. It also
provides an evaluation based on CVP analysis.

1. Merchandise Purchase Budget


The company maintains inventory to meet next month's sales requirement. The purchases
are made based on the following calculations:

Month COGS (60% Next Month Total Beginning Purchases


of Sales) Inventory Requiremen Inventory
t

December 210,000 240,000 450,000 240,000 210,000


January 240,000 300,000 540,000 240,000 300,000
February 300,000 330,000 630,000 300,000 330,000
March 330,000 360,000 690,000 330,000 360,000

2. Cash Budget

a. Cash Receipts Budget


The following table shows cash inflows from cash sales and credit collections:

Month Cash Sales (20%) Credit Collection Total Cash Inflows

January 80,000 305,000 385,000


February 100,000 362,000 462,000
March 110,000 432,000 542,000

b. Cash Disbursements Budget


The table below represents the company's cash outflows:

Month Admin Selling Cash Credit Machine Dividend Total


Exp Exp Purchas Purchas Purchas Outflow
es es Paid e

January 30,000 20,000 75,000 157,500 175,000 50,000 507,500


Februar 30,000 25,000 82,500 225,000 175,000 0 647,500
y
March 30,000 27,500 90,000 247,500 0 0 395,000

3. Budgeted Income Statement


Particulars Amount (Rs.)

Sales Revenue 1,450,000


Less: COGS (60%) (870,000)
Gross Profit (40%) 580,000
Less: Selling Expenses (5%) (72,500)
Less: Admin Expenses (90,000)
Less: Depreciation (10%) (45,000)
Net Profit Before Tax 341,300

4. Budgeted Balance Sheet (March 31, 2025)

a. Assets
Particulars Amount (Rs.)

Cash at Bank 177,000


Accounts Receivable 168,000
Merchandise Inventory 360,000
Fixed Assets (Net of Depreciation) 405,000
Total Assets 1,110,000

b. Liabilities & Equity


Particulars Amount (Rs.)

Accounts Payable 247,500


Loan Outstanding 260,000
Share Capital 450,000
Retained Earnings 152,500
Total Liabilities & Equity 1,110,000
5. CVP Analysis & Company Performance
Based on the CVP approach, the company has a good profit margin but faces cash flow
challenges. Key recommendations include:

1. **Increase Cash Sales** – More cash sales will reduce dependency on credit collection.

2. **Inventory Management** – Optimizing purchases will reduce working capital


requirements.

3. **Loan Management** – The company must ensure timely loan repayment to avoid high
interest costs.

4. **Profitability** – With a net profit of Rs. 341,300, the company is profitable but needs
better liquidity management.

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