A Monthly Cash Budget, And Various Sensitivity Analysis Essay

A Monthly Cash Budget, And Various Sensitivity Analysis Essay

Length: 1447 words (4.1 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

In this case study, we prepared a monthly cash budget, daily cash budget, and various sensitivity analysis in order to persuade a bank to offer a credit line to Alpine Wear, of approximately $350,000. Because of a recent tightening of credit, bankers have been asking clients to estimate borrowing needed for the rest of the current year, 2000, and the first half of 2001. Therefore, we have created a monthly cash budget January-June, and a daily cash budget for all of January. We are hoping to receive a credit line of about $350,000. However, some background information may be needed in order to do so.

Alpine Wear is a company that operates seven days a week. They have strict sale policy of 2/10, net, 30. In other words, if it the account is paid within 10 days, the customer receives a 2% discount on their purchases. If it is not paid within 10 days, it is due in 30 days. Alpine Wear tracts that about 30% of customers take the discount offer, 55% of customers pay within that thirty days, and 15% pay late. They also have various accounts for cash disbursements that are paid for on a certain day of the month.
We were given various amounts of information regarding how to calculate the daily cash budget for January. Alpine Wear assumes that sales are made at a constant rate, daily. Customers using the discount pay on day ten, while others take the full thirty days given to pay. On the last day of the month, Alpine Wear will begin to collect December’s late sales, as well as January’s net sales. On the 10th of every month, the lease payment is due. Labor costs are paid on the 2nd and 17th of every month. Materials purchased are paid for on the 10th, while interest expenses are paid for on the 5th. It is required that Alpine Wear has a...

... middle of paper ...

... After analyzing projections and the sensitivity of those projections, it would seem reasonable for Alpine Wear to ask for a $500,000 credit line from the bank. This would give Alpine a large buffer compared to the projected need. Also it would be adequate in covering more than reasonable drops in projected sales. As shown in the sensitivity analysis, many variables can affect cash flows. With all of those taken into account and the detailed projected budgets, it does not seem unreasonable to ask the bank to accept a request for a $500,000 credit line to Alpine Wear. There is far horizon of sales and the company has shown that it will be in a positive financial position in approximately 3 months. In closing, this credit line would allow Alpine to comfortably borrow while steadily increasing net cash flows in 5 of the next 6 months and decreasing the risk for the bank

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on Sensitivity Analysis

- Sensitivity Analysis A technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions. This technique is used within specific boundaries that will depend on one or more input variables, such as the effect that changes in interest rates will have on a bond's price. Sensitivity analysis is a way to predict the outcome of a decision if a situation turns out to be different compared to the key prediction(s). Sensitivity analysis is very useful when attempting to determine the impact the actual outcome of a particular variable will have if it differs from what was previously assumed.....   [tags: Financial Analysis Forecasting]

Free Essays
1237 words (3.5 pages)

Essay on Various Definitions

- Ultrasonic sound- The PING))) ultrasonic sensors operate using ultrasonic sound. The sensor emits an ultrasonic chip, which is reflected off of and object. The sensor times how long it takes for the sensor to emit the chirp, and have it received off the object as an echo. Using the equation of the speed of sound in air, the sensor monitors distance. The sensor operates using a 40kHz chirp. This frequency falls in the sound range commonly used by animals for communication. Frequencies that are much higher, for example 1-20 mHz are used more commonly for medical imaging....   [tags: Various]

Better Essays
1518 words (4.3 pages)

Analysis Of Phenylthiocarbamide ( Ptc ) Taste Phenotype Sensitivity Essay

- Analysis of Phenylthiocarbamide (PTC) taste phenotype sensitivity Introduction Taste occurs when chemical signals stimulate taste receptor cells in the oral cavity to detect tastes such as sweet, sour, salty, bitter and umami. PTC taste sensitivity is a very common substance used to study taste perception. Many studies have provided insights into taste perception using sodium benzoate and thiourea. PTC sensitivity has often been used for practical demonstrations in educational settings to investigate variation in taste perception....   [tags: Allele, Genotype, Genetics, Taste]

Better Essays
702 words (2 pages)

Essay on The Factors For Price Sensitivity

- The factors for price sensitivity in making a decision to purchase a personal computer there are several items that I would consider. Brand name is important along with the quality of the product. For example, I would purchase a Dell computer over an HP or ASUS because I know the quality is excellent, they have good warranties and I will be satisfied knowing the computer will last for several years. The features of the personal computer will depend on what my plan is for using the computer. For example, if I were going to use it just for the Internet, school and email I would not purchase a higher end computer....   [tags: Car rental, Car rental companies]

Better Essays
1271 words (3.6 pages)

Essay on Cultural Sensitivity And Cultural Competence

- Cultural Sensitivity and Cultural Competence In Prevention and Intervention Programming Culturally competent care is care that respects diversity in the patient population, and cultural factors that affect health and health care, such as language, communication styles, attitudes, behaviors, and beliefs. The national CLAS Standards provide the blueprint to implement such appropriate services to improve health care in the United States. The standards cover many areas, such as leadership, workforce, governance; communication and language assistance; organizational engagement, continuous improvement, and accountability....   [tags: Health care, Medicine, Healthcare]

Better Essays
1953 words (5.6 pages)

Various Essays Analysis

- Precis – Mode Project Part 1 The Conversation: In the narrative essay, “The Conversation,” author Wendy Lesser conveys how her experiences with e-mailing changed her life. Lesser defines her view of e-mail by narrating on her stay in London and reflecting on her intimate connection to her CompuServe e-mail device to communicate with her friends, peers, husband, and family. Her purpose is to expose the modernization of e-mails in society in order to make her readers aware of the relationship people create with technology through the revolutionary fascinations the technology is capable of....   [tags: The Conversation, The Keyboard, The Golden Spike]

Better Essays
724 words (2.1 pages)

Essay on Various Subjects

- According to Peter’s map – the north is rich and the south is poor, this is also stated by the Brandt Report. The Brandt Report works on the principle that; if you give a man a fish, you feed him for a day but if you teach him to fish, you will feed him for life. This basically means that if you give someone in a poor country some fish for example, it will only last for a limited amount of time, because it gets eaten – a short term solution. Whereas if you teach him how to fish, he can go and fish for himself and feed himself free of charge to him or anyone else – a long term solution....   [tags: Various]

Better Essays
1035 words (3 pages)

Essay about Various Subjects

- Cure panic attacks and stop living in fear. Since this disorder can occur without warning, it can take a toll on those afflicted, preventing them from living a healthy, productive lifestyle. Common symptoms include feeling weak, faint, or dizzy; tingling or numbness in the hands; sweating or chills; chest pains including "racing" heart and difficulty in breathing; and a sense of losing control. Anti-anxiety medicines like Xanax, Klonopin, and Ativan are some of the medications prescribed at the onset of the treatment for panic attacks....   [tags: Various]

Better Essays
1918 words (5.5 pages)

Essay about Cultural Sensitivity

- Cultural sensitivity occurs when people recognize and are aware that each country or various ethnic groups of people have their own set of experiences, beliefs, values, and language that affect their perceptions toward life. Addressing Cultural sensitivity permits people to comprehend that there are differences between cultures. Furthermore, having awareness in the differences between cultures permits a culturally competent person to communicate effectively with others that are outside of one’s realm....   [tags: social issues, ethnic groups]

Better Essays
1969 words (5.6 pages)

Essay on Xm Radio

- 1. Summary and Conclusion We believe XM Satellite Radio should offer a subscription-based offering of 50+ channels for $10 per month. XM needs to acquire new customers and we recommend using the $100M launch campaign as described in this report to generate significant customer adoption. 2. Situation Analysis a. Company XM Satellite Radio was founded in 1992 to provide radio entertainment to the via a satellite-based broadcast system. XM is a very early-stage company. Primary Issues · XM must define a business model, manufacturing process, and marketing strategy....   [tags: Business Analysis Management Strategy]

Free Essays
1261 words (3.6 pages)