Wine Depot
Cash Budget Year 1 Year 2 Year 3 Year 4
Operating activities
Operating cash receipts
Product sales revenue 650,000 715,000 786,500 865,150
Collections in the year of sale 598,000 657,800 723,580 795,938
Collections in the year following sale 48,000 52,000 57,200 62,920
Expenses
Advertising expense 10,000 10,500 11,025 11,576
Marketing expense 6,000 6,300 6,615 6,946
Interest expense 35,000 36,750 38,588 40,517
Salaries expense 250,000 262,500 275,625 289,406
Wages expense 65,000 68,250 71,663 75,246
Supplies expense 7,500 7,875 8,269 8,682
Utilities expense 10,000 10,500 11,025 11,576
Operating cash payments 569,039 617,066 659,602 704,421
Cash from (to) operating activities 76,962 92,734 121,178 154,437
Facility purchases (75,000) (75,000) (75,000) (75,000)
Equipment sales 10,000 10,000 10,000 10,000
Cash from (to) investing activities (65,000) (65,000) (65,000) (65,000)
Loan proceeds 300,000
Operating cash receipts 646,000 709,800 780,780 858,858
Operating cash payments
Purchases
Cost of expected sales 195,000 214,500 235,950 259,545
Required ending inventory 21,450 23,595 25,955 28,550
Beginning inventory (32,000) (21,450) (23,595) (25,955)
Payments in the year following purchase 14,000 12,912 15,165 16,682
Cash payments for purchases 185,539 214,391 236,793 260,472
Loan payments (81,171) (81,171) (81,171) (81,171)
Cash from (to) financing activities 218,829 (81,171) (81,171) (81,171)
Beginning cash 20,000 250,791 197,353 172,360
Assumptions
First year sales 650,000
Sales growth each year 110%
Collections in the year of sale 92%
Collections in the year following sale 8%
Required ending inventory 10%
Beginning inventory 32,000
Cost of expected sales 30%
Beginning cash 20,000
Advertising expense 10,000
Marketing expense 6,000
Depreciation expense 8,000
Interest expense 35,000
Wages expense 65,000
Supplies expense 7,500
Utilities expense 10,000
Loan proceeds 300,000
Annual loan payment 81,171
Annual facility purchases 75,000
Annual equipment sales 10,000
Sales in the previous year 600,000
Purchases in the previous year 200,000
Expense growth each year 105%
Payments in the year of purchase 93%
Payments in the year following purchase 7%