Hampton Machine Tools

Key Inputs

Sources and Uses Statement ( Nov 30- Aug13) Sources Thousands of Dollars Increase in bank debt 1000 Increase in retained earnings 883 decrease in cash 961 increase in customer advances 726 increase in a/c payable 600 decrease in a/c receivables 561 Increase in taxes payable 329 Decrease in net fixed assets 92 decrease in prepaid expenses 20 total sources 5172 Uses Stock repurchase 3000 Increase in inventories 2163 decrease in accruals 9 Total of uses 5172

Stock Holders Statement Debt Credit Repurchas 3000 Opening Closing 3424 Bal Retained E 6424

Projected Cash Budget, Sept 1979- Jan 1980 (thousands of Dollars) September October November December January Receipts 684 1323 779 1604 2265 Collections of Receivables (1) 350 Bank Loan Total Cash inflow 684 1673 779 1604 2265 Expenditure payments of accounts payable Other operating outlays Capital expenditure

948 400

600 400 350

600 400

600 400

600 400

tax payments interest payments-- bank loan Principal Payments-- Bank loan Dividends Total Cash outflow Beginging Cash balance Net Monthy cash flow Ending Cash flow

181 15

15

20

1544 1559 -860 699

1365 699 308 1007

1020.25 1007 -241.25 765.75

181 20 1350 150 2701.25 765.75 -1097.25 -331.5

1000 -331.5 1265 933.5

Notes 1) Receivables assumes a 30 day collection period 2) October collections from receivables = 2163 minus 840 advance = 1323 3) November collection = 1505 minus 726 advance = 779 4) Accounts payable assumes a 30 day payables

ders Statement 5541 883 6424

5.25

Proforma Income Statement Sept 1979-Dec 1980 Derivation Sales Cost of Sales and Other expenses Profit Before taxes taxes PAT Dividends Additions to Retained Earnings 7537 5857 1680 771.4 908.6 150 758.6 Projected cash flow for Sept, Oct, Nov and Dec See Notes Taxes 48% minus $ 35 investment tax credit Proposed Dec Dividends

Note Since prepaid expenses and accrued expenses are assured to be unchanged are equal to other expenditure, therfore Total costs = Cost of sales+ other expenses Total costs Reduction in WIP, inventories materials inventoriesmonth four month interest Reduction in Raw Four monthDepriciationfour purcahses other outlay 5857 1320 420 2400 47 1600 70 Depriciation of New machine: 350 straight line for eight years is 43.75, i.e. per month 3.65 Depreciation from Sept - Dec = Four months of old machine + two months of new machine 47 40 7 Proforma Balance sheet Dec 31st 1979 Cash Accounts Receivables Inventories Current Assets Gross Fixed assets Accumilated Depriciation Net Fixed Assets Prepaid expenses total Accounts Payable Accruals Taxes payable Current liabilities Net worth Total Liabilities Derivation -331 cash budget 2265 december sales 3024 $4765 minus 1320 reduction in WIP minus 420 in raw materials 4958 4360 4010 + 350 new additions 3137 3090 + 47 1223 42 unchanged from aug 31st 1979 6223 600 december's purchase 552 unchanged from aug 31st 1979 888 479 minus 362 tax payments + 771 liability sept through december 2040 4183 3424+759 retained earnings sept through December 6223

other expenditure, therfore

COGS Statement Raw Material Comsumed Purchases Add: Opening Stock Less : Closing Stock Total Manufacturing Cost Wages Power and Fuel Repairs Maintanence Consumables Deprication Rent Total Add: Opening WIP Less Closing WIP Cost pf Production Add: Opening FG LessClosing FG cogs Other Exp COS

Figures Not related to the case

30450 3900 3750 30600 6500 675 385 250 320 1500 20 40250 10950 10700 40500 8000 8300 40200 15000 25200

150

250