Corporate Finance

312
Corporate Finance

February and March have been purchased on 2 months’ and one month credits respectively.
The expected sales and purchases for the second quarter are:

Month Sales Cash purchases Credit Credit period

April Rs 2.4 crore Rs 12 lac Rs 37 lac 2 months
May Rs 2.3 crore Rs 17 lac Rs 35 lac 1 month
June Rs 2.6 crore Rs 20 lac Rs 40 lac 1 month

Other Details:

Salaries for April through June: Rs 45 lac, Rs 50 lac, Rs 55 lac

Interest on term-loan to be paid in April: Rs 7.5 lac

Principal repayment in June: Rs 100 lac

Utility charges: Rs 80,000 p.m.

The cash forecast is as shown:

Month

April May June

Inflow
Sales collections:
20 percent of April Rs 48 lac
60 percent of March Rs 1.5 crore
18 percent of February Rs 0.4 crore
20 percent of April Rs 46 lac
60 percent of March Rs 1.44 crore
18 percent of February Rs 45 lac
20 percent of April Rs 0.52
60 percent of March Rs 1.38
18 percent of February Rs 0.432
Rs 2.38 crore Rs 2.35 crore Rs 2.332 crore
Outflow
Cash purchases Rs 12 lac Rs 20 lac
Credit purchases
February purchases Rs 52 lac
March purchases Rs 30 lac
April purchases Rs 37 lac
May purchases Rs 35 lac

Salaries Rs 0.45 crore Rs 0.5 crore Rs 0.44 crore
Interest Rs 0.075 crore
Principal repayment Rs 1.0 lac
Utility charges Rs 80,000 Rs 80,000 Rs 80,000

The summary of inflows and outflows is as shown: