Toy World Inc

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Running head: Toy World, Inc.
Case Study

Toy World, Inc.
Summary
I have been hired by Toy World’s treasurer Grace Jones, as her assistant, and have been given the task of preparing a cash budget for the CEO Dan Culbreth. I have been told to do a monthly budget for January to June and a daily budget for the month of January. I’m required to have this cash budget done by Sunday for a meeting with Dan and Grace. Dan will then be presenting the budget in his meeting about loan requirements, with the bankers on Monday. Assumptions

Forecasts will not exceed a plus or minus 5% range.
Analysis
Monthly Cash Budget Worksheet| | | | | | |
 |  | Jan| Feb | Mar| Apr| May| June|
I.| Collections and Payments| | | | | | |
| Gross Sales (Expected)| $500,000| $300,000| $280,000| $225,000| $200,000| $250,000| | Gross Sales (Realized)| $500,000| $300,000| $280,000| $225,000| $200,000| $250,000| | Collections| | | | | | |

| Month of Sale| $171,500| $102,900| $96,040| $77,175| $68,600| $85,750| | 1 Month after Sale| 555,000| 300,000| 180,000| 168,000| 135,000| 120,000| | 2 Months after Sale| 40,000| 46,250| 25,000| 15,000| 14,000| 11,250| | Total Collections| $766,500| $449,150| $301,040| $260,175| $217,600| $217,000| | Purchases| $84,000| $67,500| $60,000| $75,000| $105,000| $120,000| | Payments:| | | | | | |

| 2 Months before Sale| 50,400| 40500| 36000| 45000| 63000| 72000| | 1 Months before Sale| 36,000| 33,600| 27000| 24000| 30,000| 42,000| | Total Payments| $86,400| $74,100| $63,000| $69,000| $93,000| $114,000| | | | | | | | |

II.| Cash Gain (Loss) For Month| | | | | | |
| Collections| $766,500| $449,150| $301,040| $260,175| $217,600| $217,000| | Payments| | | | | | |
| Purchases| $86,400| $74,100| $63,000| $69,000| $93,000| $114,000| | Labor| | | | | | |
| 2 Months before Sale| 56,000| 45,000| 40,000| 50,000| 70,000| 80,000| | 1 Month before Sale| 60,000| 56,000| 45,000| 40,000| 50,000| 70,000| | General/Admin. Exp.| 95,000| 95,000| 95,000| 95,000| 95,000| 95,000| | Lease| 60,000| 60,000| 60,000| 60,000| 60,000| 60,000| | Miscellaneous Exp.| 40,000| 40,000| 40,000| 40,000| 40,000| 40,000| | Taxes| | | 90,000| | | 90,000|

| Interest (on bonds)| 80,000| | | | | |
| New Equipment| 0| 0| 0| 0| 0| 100,000|
| Total Payments| $477,400 | $370,100 | $433,000 | $354,000 | $408,000 | $649,000 | | Net Cash Gain (Loss)| $289,100 | $79,050 | ($131,960)| ($93,825)| ($190,400)| ($432,000)| | | | | | | | |

III.| Cash Surplus or Loan Requirement| | | | | |
| Cash at Start (no borrowing)| $450,000 | $739,100 | $818,150 | $686,190 | $592,365 | $401,965 | | Cumulative Cash| $739,100 | $818,150 | $686,190 | $592,365 | $401,965 | ($30,035)| | Target Cash Balance| $450,000 | $450,000 | $450,000 | $450,000 | $450,000 | $450,000 | | Surplus Cash or Total Loans| | | | | | |

| Outstanding to Maintain| | | | | | |
| Target Cash Balance| $289,100 | $368,150 | $236,190 | $142,365 | ($48,035)| ($480,035)|

Daily Cash Budget| | | | | | |
 | Day:| 1| 2| …| 5| …| 10|
I.| Collections and Payments| | | | | | |
| Gross Sales| $16,129| $16,129| …| $16,129| …| $16,129| | Collections:| | | | | | |
| Discount Payers| $10,235| $10,235| …| $10,235| …| $10,235| | Net Payers| 17,903| 17,903| …| 17,903| …| 17,903| | Late Payers| 1,333| 1,333| …| 1,333| …| 1,333| | Total Collections| $29,471| $29,471| …| $29,471| …| $29,471| | Purchases| $84,000| | | | | |

| Payments:| | | | | | |
| 2 Months before Sale| | | | $50,400| | |...
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