Question number 19 Methods for assessing cash flow over time
Question № 29. Evaluating the effectiveness of the developed management policies
Practice
Given the following information about the company:
1. On average, 80% of the company's products sells on credit, and 20% - in cash. As a rule, the company provides its counterparties a 30-day loan on favorable terms. Statistics show that 70% of payments are paid by contractors on time, ie for a given month to pay for the remaining 30% paid within the next month.
2. In determining the price of its products the company adhere to the following policies: the cost of raw materials should be about 65%, and other expenses - about 15% of the selling price of products, ie, the total share of the costs should not exceed 80% of the selling price.
3. Raw materials are purchased in the amount of the needs of the next month.
4. The Company intends to increase the production volume with a growth rate of 2.5% per month. The projected changes in prices for raw materials will be planned in the year of 3.5% per month. The projected inflation rate - 1.5% per month.
5. The balance of the account as of January 1 is 10 mln. Rubles. Since this amount is not sufficient for smooth operation, and decided to increase its target to have a cash balance on the current account in January, planned in the amount of 18 mln. Rub .; its value in the coming months is proportional to the rate of inflation.
6. The share of taxes and other payments to the budget is around 35% of gross profits.
7. In March, the planned year the company intends to acquire new equipment for $ 25 mln. Rubles.
8. In August, all the shops goes into a collective vacation, and it is planned to carry out repairs of production facilities in the amount of 10 mln. Rubles.
9. The need to calculate the actual data for November and December of the previous year are given in the table. 1.
Table 1
Fact. proceeds from the sale in November Fact. proceeds from the sale in December Fact. Costs for raw materials in December
92 132 67