Hampton Machine Tool Case Solution

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CASH BUDGET for HAMPTON MACHINE TOOL(000 $) CURRENT September October November December Receipts: A/R Collection(assumes 30-day;Oct& Nov. less advances of $840 and $726, respectively) Bank Loan Total Cash Inflow Expenditures: A/P Payment(paid in 30 days) Other Op. Outlays CAPITAL EXPENDITURE Taxes Interest Loan Principal Dividends Total Cash Outflow Beginning Cash Net Monthly Cash Flow ENDING CASH 684.000 2243.000 1323.000 2022.000 779.000 350.000 2136.000 1604.000 2369.750

January

Sales -Advances 2265.000 Entire Credit 1933.500 sales for November 600.000 400.000

948.000 400.000 181.000 15.000

600.000 400.000

600.000 400.000 350.000 20.250

600.000 400.000 181.000 20.250 1350.000 150.000 2701.250 765.750 -331.500

15.000

1544.000 1559.000 699.000

1015.000 699.000 1007.000

1370.250 1007.000 765.750

1000.000 -331.500 933.500

Negative balance due to loans and dividend.

CASH BUDGET for HAMPTON MACHINE TOOL(000 $) Early Repayment September October Receipts: A/R Collection(assumes 30-day;Oct& Nov. less advances of $840 and $726, respectively) Bank Loan Total Cash Inflow Expenditures: A/P Payment(paid in 30 days) Other Op. Outlays CAPEX Taxes Interest Loan Principal Dividends Total Cash Outflow Beginning Cash ENDING CASH

684.000 2243.000

1323.000 1822.000

948.000 400.000 181.000 15.000 200.000 1744.000 1559.000 499.000

600.000 400.000

12.000 100.000 1112.000 499.000 710.000

TOOL(000 $) Early Repayment November December

January

779.000 350.000 1839.000

1604.000 2077.250

2265.000 1945.500

600.000 400.000 350.000 15.750

600.000 400.000 181.000 15.750 1050.000 150.000 2396.750 473.250 -319.500

600.000 400.000

Sales -Advances = 2163 - 840 Entire Credit sales for November

1365.750 710.000 473.250

1000.000 -319.500 945.500

Negative balance even after early repayment of principal.

CASH BUDGET for HAMPTON MACHINE TOOL(000 $) Early Repayment without divid September October Receipts: A/R Collection(assumes 30-day;Oct& Nov. less advances of $840 and $726, respectively) Bank Loan Total Cash Inflow Expenditures: A/P Payment(paid in 30 days) Other Op. Outlays CAPITAL EXPENDITURE Taxes Interest Loan Principal Dividends Total Cash Outflow Beginning Cash Net Monthly Cash Flow ENDING CASH

684.000 2243.000

1323.000 1822.000

948.000 400.000 181.000 15.000 200.000 1744.000 1559.000 499.000

600.000 400.000

12.000 100.000 1112.000 499.000 710.000

$) Early Repayment without dividends November December

January

779.000 350.000 1839.000

1604.000 2077.250

2265.000 2095.500

Sales Advances Entire Credit sales for November

600.000 400.000 350.000 15.750

600.000 400.000 181.000 15.750 1050.000 2246.750 473.250 -169.500

600.000 400.000

5.250 200.000 1205.250 -169.500 890.250

1365.750 710.000 473.250

Negative balance even after early repayment of principal without

CASH BUDGET for HAMPTON MACHINE TOOL(000 $) extended Repayment with divid September October Receipts: A/R Collection(assumes 30-day;Oct& Nov. less advances of $840 and $726, respectively) Bank Loan Total Cash Inflow Expenditures: A/P Payment(paid in 30 days) Other Op. Outlays CAPITAL EXPENDITURE Taxes Interest Loan Principal Dividends Total Cash Outflow Beginning Cash Net Monthly Cash Flow ENDING CASH

684.000 2243.000

1323.000 2022.000

948.000 400.000 181.000 15.000

600.000 400.000

15.000

1544.000 1559.000 699.000

1015.000 699.000 1007.000

$) extended Repayment with dividends November December January

779.000 350.000 2136.000

1604.000 2369.750

Sales 2265.000 Advances
2283.500

600.000 400.000 350.000 20.250

600.000 400.000 181.000 20.250 1000.000 150.000 2351.250 765.750 18.500

600.000 400.000

Entire Credit sales for November

5.250 350.000 1355.250 18.500 928.250

1370.250 1007.000 765.750

Finally a positive balance due to delay in repayment of $350,000.

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