Question

a	Using the information provided, construct a monthly cash budget for October through December 2014. Based on your analysis, will Noble enjoy a surfeit of cash, or require external financing?
b	Construct a pro forma income statement for the first fiscal quarter of 2015 and a pro forma balance sheet as of December 31, 2014. What is your estimated external financine needed for December 31?
c	Does the December 31, 2014, estimated external financing equal your cash surplus (deficit) for this date from your cash budget?
d	Based on your answers above, construct a cash flow forecast for Noble for the period October through December 2014.
Noble Selected Information and Financial Statements
	Sales (20 percent for cash, the rest on 30-day credit terms):
	2014 Actual			2014 Projected
	July	August	September	October	November	December
	76,000	88,000	266,000	125,000	51,000	53,000
	Purchases (all on 60-day terms):
	2014 Actual			2014 Projected
	July	August	September	October	November	December
	116,000	122,000	257,000	62,000	27,000	26,000
Salaries payable monthly				20,000
Principal payment on debt due in December				25,700
Interest due in December				9,000
Dividend payable in December				15,000
Taxes payable in November				19,000
Addition to accumulated depreciation in December				4,000
Cash balance on October 1, 2014				34,000
Minimum desired cash balance				15,000
Noble’s annual income statement and balance sheet for September 30, 2014 appear below.
Additional information about the company's accounting methods and expectations for
the last three months of 2014 appear in the footnotes.
		Noble
		Annual Income Statement
		Fiscal Year ended September 30, 2014 ($ 000)
Net sales			1,581.6
Cost of goods sold1			1,098.0
Gross profits			483.6
Selling and administrative expenses2			240.0
Interest expense			18.0
Depreciation3			16.0
Net profit before tax			209.6
Tax at 33%			69.2
Net profit after tax			140.4
		Noble
		Balance Sheet
		September 30, 2014 ($ 000)
Assets
Cash			34.0
Accounts receivable			212.8
Inventory			425.0
Total current assets			671.8
Gross fixed assets			135.0
Accumulated depreciation			52.0
Net fixed assets			83.0
Total assets			754.8
Liabilities
Bank loan			0.0
Accounts payable			379.0
Accrued expenses4			55.0
Current portion long-term debt5			25.7
Taxes payable			56.0
Total current liabilities			515.7
Long-term debt			120.0
Shareholders' equity			119.1
Total liabilities and equity			754.8
1. Cost of goods sold consists entirely of items purchased during the quarter.
2. Selling and administrative expenses consist entirely of salaries.
3. Depreciation is straight-line at the rate of $4,000 per quarter.
4. Accrued expenses are not expected to change in the last quarter.
5. $25.7 due December 2014. No payments for remainder of year.

Answer 1

		Oct	Nov	Dec
sales		25000	10200	10600
accrued sales		212800	100000	40800
Total receipt		237800	110200	51400
purchase		122000	257000	62000
Salary		20000	20000	20000
Principal payment				25700
Interest				9000
Dividend				15000
Taxes			19000
Total outflow		142000	296000	131700
Net inflow		95800	-185800	-80300
Noble will have defeciency of cash in November and December.Thus, it require External financing.
B answer
	Proforma Income Statement
	Noble
	Quaterly Income Statement
Net Sales		229000
less:Cost of good sold		115000
gross profit		114000
Selling and Admin Expense		60000
Interest		9000
Depreciation		4000
Net Profit Before Tax		41000
Less: Tax 33%		13530
Net Profit after Tax		27470
	Proforma Balancesheet for dec 31,14
Asset
Cash		15000
Account receivable		42400
Inventory		412530
		469930
Gross fixed Asset		135000
Acc Depreciation		56000
Net Fixed Asset		79000
Total Asset		548930
Liabilities
External Financing		-185300
Account Payable		53000
accrued Expense		55000
Long term debt		0
Taxes Payable		50530
Total Current Liability		-26770
Long term Debt		120000
Shareholder Equity		119100
Total Liabilities and Equity		212330
External Financing Require
Cash Deficit	-170300
Minimum Cash Balance	15000
	-185300
opening Balance at quarter	34000
	-151300
Answer C
No external finance is not equal to cash deficit in budget.External finance is raised to cover deficit as well as to maintain minimum acsh balance.
Thus external finance is greater than deficit amount
Answer D
Cash flow forecast
		Oct	Nov	Dec
sales		25000	10200	10600
accrued sales		212800	100000	40800
Total receipt		237800	110200	51400
purchase		122000	257000	62000
Salary		20000	20000	20000
Principal payment				25700
Interest				9000
Dividend				15000
Taxes			19000
Total outflow		142000	296000	131700
Net inflow		95800	-185800	-80300
opening cash		34000	129800	15000
Net Cash balance		129800	-56000	-65300
Minimum Cash Balance			-15000	-15000
External finance		0	71000	80300
closing balance		129800	15000	15000