fin622 assignment no 2

Corporate
Finance (Fin622)



Assignment
No. 2










A)


May June





Opening Balance 11500 3400





February -------- --------





March 10500 ---------





April 29400 12600





May 12000 19600





June --------- 6000





Total cash inflow 63400 41600





Less disbursement (60000) (45000)





Net cash inflow (out
flow) 3400 -3400

















My Working:-








· March





Sales = 50000


Cash sales = 15000


Credit sales = 35000


Cash sale=30% of total sales 15000


Credit sales=70% of total sales 35000


Recovery of credit sales in May = 30% of credit sales = 10500








·
April





Sales = 60000


Cash sales = 18000


Credit sales = 42000


Cash sales=30% of total sales 18000


Credit sales=42000


Recovery of credit sales in May = 70% of credit sales = 29400


Recovery of credit sales in June= 30% of credit sales = 12600





·
May





Sales= 40000


Cash sales =
12000


Credit sales = 28000


Cash sales=30% of total sales 12000


Recovery or credit sales in June = 70% of credit sales = 19600





·
June





Sales = 20000


Cash sales =30% of total sales 6000











B)





According to my point
of view in this situation Firm will take extra finance or bank overdraft to
meet its obligations because there is cash outflow (negative balance of cash)
in ending balance of cash flow statement.