Accounting & Bookkeeping & Small Business Forum

[aceman]

Hi All,

I am taking an online finance class, and was wondering if someone can help me out, since the class discussions are not very active.

*Also is there an appropriate financial modeling / analysis forum that you can point me out to, or is this the right place?
*Also the class is very important to me, so I would like to get a tutor. If you are familiar with financial statements, cash flows, budgeting, forecasting, break even analysis, valuation, capital budgeting, etc etc and how to do all that with excel, please let me know. I would like to pay you to answer my questions. We can do this over email and negotiate a price.

The Question:

There's some company. Given Ending Cash Balance for May. Also given Collections and Payments for June, July, August, Sept, Oct, Nov.

a) How do I calculate the Ending Cash Balance for each month? I thought the formula is:

Ending Cash Balance for May
+ Collection for June
- Disbursement for June
+ Current Borrowing
---------------------------------
= Ending Cash Balance for June

My question is, I do not have Disbursement and also Current Borrowing, so I do I calculate the Ending Cash Balance?

b) If the company must maintain a cash balance of at least X amount, how much will they need to borrow each month? This one is simple and I should know.

c) If the firm must pay 8% annual interest on its short-term borrowing? How des this affect the Ending Cash Balance for each month? I just don't know how to do this one.

d) How would the Ending Cash Balance change if company uses cash excess of the minimum to pay off its short-term borrowing each month?


Thanks. Guys.

[Agadaumah]

Hi aceman,

Hope these tips might help to answer your questions:

1. If there are no disbursements and borrowings during the month of june, then your cash balance at the end of june will be the opening cash balance ie ending cash balance at the end of may plus cash collections for the month of june.

2. 8% interest is an outflow (ie disbursement) and therefore reduces your ending cash balance.

3. It does not matter whether the excess cash is used to pay off the coy's shorterm loan (borrowing). The amount used to make this payment represents an out flow and therefore reduces your ending cash balance. However, where a minimum cash balance is maintained, the excess cash used to pay off the loan will not affect the ending cash balance because a constant minimum cash balance is maintained every month.

If you need further clarification(s) and other finance / accounting related questions feel free to contact me.

Thanks