The Fred Flintstone
Fred Flintstone and Co. Company: an example of financial programming
Please prepare a six month cash budget and a six month pro-forma income statement and balance sheet for the Fred Flintstone and Co. company.
The Fred Flintstone & Co. Company
Fred Flintstone & Co. has just started a small business in computer components. You have been hired to help him launching the company, and you are required to perform a six months cash budget and a six months pro-forma income statement and balance sheet with the following information:
1 The first six months turnover is:
January
20,000
February
22,000
March
25,000
April
25,000
May
30,000
June
31,000
The DSO of the company is 90 days.
2 The percentage of monthly purchases on sales is 30%. The DPO of the company is 30 days.
3 The general and administrative expenses for the current year are 30,000; labour expenses for the same period are 60,000.
4 The investments needed to start the business are 2,000,000. This amount will be financed partly by issuing shares (1,000,000) and partly by underwriting a bank loan (1,000,000).
5 For sake of simplicity, we assume that production and sales start on the 1st of January. We also assume that the capital subscription and the bank loan take place at the same date. Investments (in plant and equipment) occur on January 1st too.
6 Interests on the bank loan are paid on a quarterly basis and the yearly rate is 10%.
7 During the six-month period, there will not be any loan repayment or dividend distribution.
8 The corporate tax is 50% and taxes are paid in May of the following year.
9 The annual interest on the bank overdraft is 18%, and interests are paid on a quarterly basis. No interest rate on positive balances is foreseen.
10 No other flows except those forecasted above.
Please prepare a six month cash budget and a six month pro-forma income statement and balance sheet for the Fred Flintstone and Co. company.
The Fred Flintstone & Co. Company
Fred Flintstone & Co. has just started a small business in computer components. You have been hired to help him launching the company, and you are required to perform a six months cash budget and a six months pro-forma income statement and balance sheet with the following information:
1 The first six months turnover is:
January
20,000
February
22,000
March
25,000
April
25,000
May
30,000
June
31,000
The DSO of the company is 90 days.
2 The percentage of monthly purchases on sales is 30%. The DPO of the company is 30 days.
3 The general and administrative expenses for the current year are 30,000; labour expenses for the same period are 60,000.
4 The investments needed to start the business are 2,000,000. This amount will be financed partly by issuing shares (1,000,000) and partly by underwriting a bank loan (1,000,000).
5 For sake of simplicity, we assume that production and sales start on the 1st of January. We also assume that the capital subscription and the bank loan take place at the same date. Investments (in plant and equipment) occur on January 1st too.
6 Interests on the bank loan are paid on a quarterly basis and the yearly rate is 10%.
7 During the six-month period, there will not be any loan repayment or dividend distribution.
8 The corporate tax is 50% and taxes are paid in May of the following year.
9 The annual interest on the bank overdraft is 18%, and interests are paid on a quarterly basis. No interest rate on positive balances is foreseen.
10 No other flows except those forecasted above.