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finance business

HAPPY Mechanic Company sells electronical devices throught the country. Company has received a large order and the finance manager wants to anticipate the need for borrowing. As a result, she/he needs to forecast company’s cash requirements for the next four months. 

The actual and forecasted sales data and other information related to firm activities are given below:

1. The company collects 50 % of its sales in the month of sale, and 50 % in the subsequent month. 

2. The firm’s purchases represent 60 % of the month’s sales. The purchases are made one month before the sale. However, they are paid in the month following the purchase.

3. Labor costs are equal to 10 % of the month’s sales and are paid each month.

4. Administrative Expenses are 20 % of the month’s sales and they are paid each month.

5. A tax payment of $ 10,000 will be paid in August.

6. A dividend payment of $ 50,000 will be made in June.

7. The firm has a cash balance of $ 80,000 on June 1st and wishes to maintain a minimum cash balance of $ 60,000 in each month.

Prepare a cash budget for HAPPY company.


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