Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Petlassa is a company with a large distribution network and selling automobile tires. The company's finance manager will meet with the General Manager to discuss the financial information for the next 3 months. Last month's TL sales amount and sales
Last Month Estimations/Forecasts
May 250,000 June 100,000
July 150,000
August 250,000
September 100,000
The company collects 40% of its sales in cash and 60% as 1 month term (later).
Purchases make up 60% of sales. Petlassa makes the relevant purchase one month before its sales; However, it makes the payment 1 month after the purchase date.
Labor expenses are 5% of sales and paid in the relevant month.
General administration expenses amount to 15% of the sales and are paid in the relevant month.
10,000 TL income tax will be paid in August.
The 50,000 TL dividend payment will be made in June.
The cash balance on June 1 is required to be 80,000 TL.
All transactions take place at the end of the month. As of today (June 1), the discount rate has been determined as 14%. What is the value of the company's cash flows?
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