In 800 words..Explain two economic and market forces that will impact the financial plan of this company:Precision Machi...
Get help with any kind of assignment - from a high school essay to a PhD dissertation
Get help with any kind of assignment - from a high school essay to a PhD dissertation
In 800 words..Explain two economic and market forces that will impact the financial plan of this company:
Precision Machines is preparing a financial plan for the next six months to determine the financial needs of the company. The historical analysis of the companyâs sales shows that the companyâs total sales are 30% cash sales and 70% credit sales. Further analysis of credit sales shows that the company receives 50% of the credit sales one month after the sale and the remaining 50% in the second month after the sale. This means the cash collections from sales are 30% in the first month of the sale, 35% in the second month, and 35% in the third month.
The materials purchased by the company amounts to 50% of the sales for the month. The company pays for the purchases one month after the initial purchase. The company likes to maintain a cash balance of $5,000. The cost of borrowing is 10%. The company plans to pay off the loan whenever there is a surplus and borrow when there is a deficit.