1. CASE IN FINANCIAL
MANAGEMENT
CASE 14 – CASH BUDGET/
CASH FLOW
TEAM MEMBERS:
1. NUSAIBAH ROSLAN
2. IDARAHAYU AYOB
3. RAYMOND LUCKY SUMARGO
1

2. BACKGROUND OF TRIAD
CAMPERS
• Founder - Tim Cook
• Build camping trailers
• Customize and sell trailers from inventory
• Terms of sale 2/10, net 90
• 10% of sales paid within 10 days
• 75% of sales paid after 90 days
• 12% paid within 120 days and 3% uncollectable
• Triad Campers had cash flow problem due to increase in
the time dealers took to pay
2

3. INFORMATION
• COGS : 62% of sales
• G& A expense : 8.8%
• Depreciation and interest : Constant
• Tax: 38%
• Purchases: 32%
• Salaries: $4,200
• Wages: 19.6% of sales
• Direct factory: 4.9% of sales
• Administration expense: increase $500
per month
• Selling expenses: 7.8% of sales
• Lease payment July: $19,000
• Tax payment September: $19,800
• Cash balance: $15,000
Scheduleofprojectionreceipt
July Aug Sept
Collectionofcash
Paidin10days 10%July 10%Aug 10%Sept
Paidin90days 75%April 75%May 75%June
Paidin120days 12%March 12%April 12%May
3

4. ANSWER
S
TRIADCAMPERS
ProfitandLossStatement
July August September
NetSales $204,000 $223,000 $240,000
CostofSales $126,480 $138,260 $148,800
GrossProfit $77,520 $84,740 $91,200
General AffairExpenses $17,952 $19,624 $21,120
Depreciation $14,430 $14,430 $14,430
Interest $7,917 $7,917 $7,917
IncomeBeforeTaxes $37,221 $42,769 $47,733
Taxes $14,144 $16,252 $18,139
NetIncome $23,077 $26,517 $29,594
Question 1
4
TRIAD CAMPERS
CASH FLOW
July August September
Forecasted Sales $204,000 $223,000 $240,000
Collections:
Paid in 10days $20,400 $22,300 $24,000
Paid in 90days $111,525 $124,350 $137,700
Paid in 120days $13,471 $17,844 $19,896
Total Collections $145,396 $164,494 $181,596
Payments:
Purchases $65,280 $71,360 $76,800
Salaries $4,200 $4,200 $4,200
Wages $39,780 $43,485 $46,800
Direct Factory $9,996 $10,927 $11,760
Administration Expenses $11,500 $12,000 $12,500
Selling Expenses $15,912 $17,394 $18,720
Taxes $0 $0 $19,800
Equipment Lease $19,000 $0 $0
Total Payments $165,668 $159,366 $190,580
Net Cash Flow -$20,272 $5,128 -$8,984
Beginning Cash $15,000 -$5,272 -$144
Ending Cash -$5,272 -$144 -$9,128
Minimum Cash Desired $15,000 $15,000 $15,000
Borrowing Needed $20,272 $15,144 $24,128

5. ANSWERS
Question 2
Tim firm already borrowed $57,000 on its $60,000 line of
credit from the bank by the end of June. He will need to
increase lines of credit at least 21,000. If the increase is not
granted, Tim needs to restrict his growth rates.
5

6. ANSWERS
Question 3
TRIADCAMPERS
ProfitandLossStatement
July August September
NetSales $244,800 $267,600 $288,000
Costof Sales $151,776 $165,912 $178,560
GrossProfit $93,024 $101,688 $109,440
General AffairExpenses $21,542 $23,549 $25,344
Depreciation $14,430 $14,430 $14,430
Interest $7,917 $7,917 $7,917
Income Before Taxes $49,135 $55,792 $61,749
Taxes $18,671 $21,201 $23,465
NetIncome $30,463 $34,591 $38,284
As the sale revenue
growing, the needs to
borrow also growing.
6
TRIAD CAMPERS
CASHFLOW
July August September
Forecasted Sales $244,800 $267,600 $288,000
Collections:
Paid in 10days $24,480 $26,760 $28,800
Paid in 90days $111,525 $124,350 $137,700
Paid in 120days $13,471 $17,844 $19,896
Total Collections $149,476 $168,954 $186,396
Payments:
Purchases $78,336 $85,632 $92,160
Salaries $4,200 $4,200 $4,200
Wages $47,736 $52,182 $56,160
Direct Factory $11,995 $13,112 $14,112
Administration Expenses $11,500 $12,000 $12,500
Selling Expenses $19,094 $20,873 $22,464
Taxes $0 $0 $19,800
Equipment Lease $19,000 $0 $0
Total Payments $191,862 $187,999 $221,396
Net Cash Flow -$42,386 -$19,045 -$35,000
Beginning Cash $15,000 -$27,386 -$46,431
Ending Cash -$27,386 -$46,431 -$81,431
Minimum Cash Desired $15,000 $15,000 $15,000
Borrowing Needed $42,386 $61,431 $96,431 $200,248

7. ANSWER
S
Question 4
TRIADCAMPERS
ProfitandLossStatement
July August September
NetSales $142,800 $156,100 $168,000
Costof Sales $88,536 $96,782 $104,160
GrossProfit $54,264 $59,318 $63,840
General AffairExpenses $12,566 $13,737 $14,784
Depreciation $14,430 $14,430 $14,430
Interest $7,917 $7,917 $7,917
Income Before Taxes $19,351 $23,234 $26,709
Taxes $7,353 $8,829 $10,149
NetIncome $11,997 $14,405 $16,560
7
TRIAD CAMPERS
CASH FLOW
July August September
Forecasted Sales $142,800 $156,100 $168,000
Collections:
Paid in 10 days $14,280 $15,610 $16,800
Paid in 90 days $111,525 $124,350 $137,700
Paid in 120 days $13,471 $17,844 $19,896
Total Collections $139,276 $157,804 $174,396
Payments:
Purchases $45,696 $49,952 $53,760
Salaries $4,200 $4,200 $4,200
Wages $27,846 $30,440 $32,760
Direct Factory $6,997 $7,649 $8,232
Administration Expenses $11,500 $12,000 $12,500
Selling Expenses $11,138 $12,176 $13,104
Taxes $0 $0 $19,800
Equipment Lease $19,000 $0 $0
Total Payments $126,378 $116,416 $144,356
Net Cash Flow $12,898 $41,388 $30,040
Beginning Cash $15,000 $27,898 $69,286
Ending Cash $27,898 $69,286 $99,326
Minimum Cash Desired $15,000 $15,000 $15,000
Borrowing Needed -$12,898 -$54,286 -$84,326

8. ANSWER
S
Question 5
We do not find it surprising that only 10 percent of his
customers took advantage of the discount and paid
within 10 days. From the calculation below, we can see
that the cost of giving up the discount was only 9.13%,
hardly beneficial to pay early.
% 𝒈𝒊𝒗𝒊𝒏𝒈 𝒖𝒑 𝑪𝑫 = 𝑪𝑫 ×
𝟑𝟔𝟓
𝑵
= 𝟐% ×
𝟑𝟔𝟓
𝟖𝟎
= 𝟗. 𝟏𝟑%
Important: Dealers are selling in long term basis to attract
customers
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9. ANSWERS
Question 6
• Difference between profit and cash flow. How profitable firm can
experience cash crunches and have a need for outside capital.
Cash Flow Profit
Money in and out from operations,
financing and investing activities
Remains from sales revenue (net
income)
Concerned with the time at which
the movement of money takes
place
Looks at income and expenses at a
certain point in time
Indication of company’s strength.
Goal is to ensure firm’s solvency,
generate positive cash flow and
maximize share price
Sales made beyond a breakeven
point
Record transaction when money is
actually paid or received
Based on accrual concept
transactions recorded in the period
in which they occur regardless of
whether the cash is received or not
• Cash crunch – company needs to prioritize payment and
increase collection efforts. Caused by drop in revenue,
overcrowded inventory, undercapitalization, allow expenses to
drive revenue
9

10. REFERENCE FOR
CASH FLOW &
PROFIT
10TRIAD CAMPERS
CASHFLOW
July August September
Forecasted Sales $204,000 $223,000 $240,000
Collections:
Paid in 10days $20,400 $22,300 $24,000
Paid in 90days $111,525 $124,350 $137,700
Paid in 120days $13,471 $17,844 $19,896
Total Collections $145,396 $164,494 $181,596
Payments:
Purchases $65,280 $71,360 $76,800
Salaries $4,200 $4,200 $4,200
Wages $39,780 $43,485 $46,800
Direct Factory $9,996 $10,927 $11,760
Administration Expenses $11,500 $12,000 $12,500
Selling Expenses $15,912 $17,394 $18,720
Taxes $0 $0 $19,800
Equipment Lease $19,000 $0 $0
Total Payments $165,668 $159,366 $190,580
Net Cash Flow -$20,272 $5,128 -$8,984
Beginning Cash $15,000 -$5,272 -$144
Ending Cash -$5,272 -$144 -$9,128
Minimum Cash Desired $15,000 $15,000 $15,000
Borrowing Needed $20,272 $15,144 $24,128
TRIADCAMPERS
ProfitandLossStatement
July August September
NetSales $204,000 $223,000 $240,000
CostofSales $126,480 $138,260 $148,800
GrossProfit $77,520 $84,740 $91,200
GeneralAffairExpenses $17,952 $19,624 $21,120
Depreciation $14,430 $14,430 $14,430
Interest $7,917 $7,917 $7,917
IncomeBeforeTaxes $37,221 $42,769 $47,733
Taxes $14,144 $16,252 $18,139
NetIncome $23,077 $26,517 $29,594

11. ANSWERS
Question 7
Cash budget is important financial tool for small firm or
large firm?
Cash budget is important financial tool for small firm like
Triad Campers rather than large firm.
Larger firms tend to have steady cash flow after a long
period of business and financing institutions are more
interested with their profitability.
11

12. SCENARIO ANALYSIS
• Change in Desired Cash
• Desired Cash: $ 20,000
NetCashFlow -$20,272 $5,128 -$8,984
BeginningCash $20,000 -$272 $4,856
EndingCash -$272 $4,856 -$4,128
MinimumCashDesired $20,000 $20,000 $20,000
Cummulativeborrowing $20,272 $15,144 $24,128Total $59,545
12

13. SCENARIO ANALYSIS
• Desired Cash: $
20,000
• Proportion of sales
to avoid cash
crunch: 90% of the
originalTRIADCAMPERS
CASHFLOW
July August September
ForecastedSales $183,600 $200,700 $216,000
Collections:
Paidin10days $18,360 $20,070 $21,600
Paidin90days $111,525 $124,350 $137,700
Paidin120days $13,471 $17,844 $19,896
TotalCollections $143,356 $162,264 $179,196
NetCashFlow -$9,216 $17,215 $4,024
BeginningCash $20,000 $10,784 $27,999
EndingCash $10,784 $27,999 $23,975
MinimumCashDesired $20,000 $20,000 $20,000
Cummulativeborrowing $9,216 -$7,999 -$3,975Total -$2,758
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