You have recently been hired to work in your company’s newly established treasury department. The company is a small com

[answerhappygod]

You have recently been hired to work in your company’s newly
established treasury department. The company is a small company
that produces cardboard boxes in a variety of sizes for different
purchases. The owner of the company, works primarily in the sales
and production areas of the company. Currently, the company puts
all receivables in one shoe box and all payables in another.
Because of the disorganized system, the finance area needs work –
and that’s what you have been brought in to do. The company
currently has a cash balance of P305,000 and it plans to purchase
new boxfolding machinery in the fourth quarter at a cost of
P525,000. The machinery will be purchased with cash because of a
discount offered. The company’s policy is to maintain a minimum
cash balance of P125,000. All sales and purchases are made on
credit. The owner has projected the following gross sales for each
of the next four quarters. Q1 Q2 Q3 Q4 Gross Sales P1,310,000
P1,390,000 P1,440,000 P1,530,000 Also, gross sales for the first
quarter of the next year are projected at P1,405,000. The company
currently has an accounts receivable period of 53 days and an
accounts receivable balance of P645,000. 20% of the accounts
receivable balance is from a company that has just entered
bankruptcy, and it is likely this portion of the accounts
receivable will never be collected. The company typically orders
50% of the next quarter’s projected gross sales in the current
quarter, and suppliers are typically paid in 42 days. Wages, taxes
and other costs run about 30% of gross sales. The company has a
quarterly interest payment of P135,000 on its long tern debt. The
company uses a local bank for its short-term financial needs. It
pays 1.5% per quarter on all short-term borrowing and maintains a
money market accounts that pays 1% per quarter on all short-term
deposits. You have been asked to prepare a cash budget and
short-term financial plan for the company under the current
policies. You have also been asked to prepare
additional/alternative plans based on changes in several
inputs.