Question

During 2021, Beta Corporation expects to sell $50 in products and services. It expects its accounts receivable to decrease by $10. It plans to retire some manufacturing equipment and predicts it can get $15 for it. In addition, Beta Corporation has forecasted the following financial items for 2021:

• Depreciation expense $5

• Selling & administrative expense $6

• Capital expenditures $13

• Cost of goods sold expense $40

• Dividends to shareholders $3

1.  Based on the above, what is Beta Corporation’s total forecasted net cash burn?
   

Answer 1

The foreasted net cash burn will be as per below :

Sales will increase cash by $50.

As accounts receivable is expected to decrease by $10, cash will increase by $10

Manfacturing equipment retire will give $15, so cash will increase by $15.

And all the expenses will result in cash outflow.

So, the net cash flow forecast will be = 50+10+15-5-6-13-40-3 = 8

Hence, Beta Corporation's total forecasted net cash burn is $8.