P4-7. Cash receipts
LG 4; Basic
April May June July August
Sales $65,000 $60,000 $70,000 $100,000 $100,000
P4-8. Cash disbursement schedule
LG 4; Basic
February March April May June July
© 2015 Pearson Education, Inc.
2 Gitman/Zutter Principles of Managerial Finance, Brief, Seventh Edition
P4-9. Cash budget—basic
LG 4; Intermediate
March April May June July
Disbursements
© 2015 Pearson Education, Inc.
Chapter 3: Financial Statements and Ratio Analysis 3
P4-10. Personal finance: Preparation of cash budget
LG 4; Basic
Sam and Suzy Sizeman
Personal Budget
for the Period October—December 2016
October November December
Income
Expenses Percent
Note—Amounts are rounded off.
© 2015 Pearson Education, Inc.
4 Gitman/Zutter Principles of Managerial Finance, Brief, Seventh Edition
P4-11. Cash budget—advanced
LG 4; Challenge
a.
Xenocore, Inc.
($000)
Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
Forecast Purchases $120 $150 $140 $100 $ 80 $110 $100 $ 90
b. Required total financing
c. The line of credit should be at least $37,000 to cover the maximum borrowing needs for the month of
April.
© 2015 Pearson Education, Inc.
Chapter 3: Financial Statements and Ratio Analysis 5
P4-12. Cash flow concepts
LG 4; Basic
Note to instructor: There are a variety of possible answers to this problem, depending on the assumptions
Transaction Cash Budget
Pro Forma
Income Statement
Pro Forma
Balance Sheet
P4-13. Cash budget—scenario analysis
LG 4; Intermediate
a.
Trotter Enterprises, Inc.
Multiple Cash Budgets ($000)
October November December
Pessi-
mistic
Most
Likely
Opti-
mistic
Pessi-
mistic
Mos
t
Likel
y
Opti-
mistic
Pess
i-mis
tic
Mos
t
Likel
y
Opti-
mistic
Total cash
cash balance
© 2015 Pearson Education, Inc.
6 Gitman/Zutter Principles of Managerial Finance, Brief, Seventh Edition
balance
b. Under the pessimistic scenario Trotter will definitely have to borrow funds, up to $162,000 in
P4-14. Multiple cash budgets—scenario analysis
LG 4; Intermediate
(a) and (b)
Brownstein, Inc.
Multiple Cash Budgets
($000)
1st Month 2nd Month 3rd Month
Pessi-
mistic
Most
Likely
Opti-
mistic
Pessi-
mistic
Most
Likel
y
Opti-
mistic
Pessi
-mis
tic
Most
Likel
y
Opti-
mistic
c. Considering the extreme values reflected in the pessimistic and optimistic outcomes allows
© 2015 Pearson Education, Inc.
Chapter 3: Financial Statements and Ratio Analysis 7
P4-15. Pro forma income statement
LG 5; Intermediate
a.
Pro Forma Income Statement
Metroline Manufacturing, Inc.
for the Year Ended December 31, 2016
(percent-of-sales method)
b.
Pro Forma Income Statement
Metroline Manufacturing, Inc.
for the Year Ended December 31, 2016
(based on fixed and variable cost data)
c. The pro forma income statement developed using the fixed and variable cost data projects a higher net
© 2015 Pearson Education, Inc.
8 Gitman/Zutter Principles of Managerial Finance, Brief, Seventh Edition
P4-16. Pro forma income statement—scenario analysis
LG 5; Challenge
a.
Pro Forma Income Statement
Allen Products, Inc.
for the Year Ended December 31, 2016
Pessimistic Most Likely Optimistic
b. The simple percent-of-sales method assumes that all costs are variable. In reality some of the
expenses will be fixed. In the pessimistic case this assumption causes all costs to decrease with the
c.
Pro Forma Income Statement
Allen Products, Inc.
for the Year Ended December 31, 2016
Pessimistic Most Likely Optimistic
d. The profits for the pessimistic case are larger in part (a) than in part (c). For the optimistic case, the
© 2015 Pearson Education, Inc.
Chapter 3: Financial Statements and Ratio Analysis 9
© 2015 Pearson Education, Inc.