Example: Cash Budget Information

Example: Cash Budget Information

• Pet Treats Inc. specializes in gourmet pet treats and receives all income from sales
• Sales estimates (in millions)
• Q1 = 500; Q2 = 600; Q3 = 650; Q4 = 800; Q1 next year = 550
• Accounts receivable
• Beginning receivables = $250
• Average collection period = 30 days
• Accounts payable
• Purchases = 50% of next quarter’s sales
• Beginning payables = 125
• Accounts payable period is 45 days
• Other expenses
• Wages, taxes and other expense are 25% of sales
• Interest and dividend payments are $50
• A major capital expenditure of $200 is expected in the second quarter
• The initial cash balance is $100 and the company maintains a minimum balance of $50

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