# What is the ending cash in September if the starting cash was \$20,000 in August? We have a company which had been growing at a rate of 8% but is now expected to be growing at 5% from this month (August) on (i.e. the growth from August to September is 5% while the growth from July to August is 8%). The company collects 20% of its sales COD(cash on delivery), 30% of the sales in the month following the sale, and 45% of the sales in the second month following the sale while 5% is considered unrecoverable. Manpower costs are \$2000 per month plus 20% of sales. Inventory purchases are 35% of the next month's sales. Assuming, that there is a one time receipt of \$10,000 cash in August, that there are no other money-in and money-out flows, that the Sales in August will be \$250,000.

The sales revenue in the month of August is \$250000. In the period prior to August, the company has been growing at a rate of 8% per month. This gives a sales revenue of \$250000/1.08 = \$231481.48 in July and a sales revenue of \$250000/1.08^2 = \$214334.70 in the month of June.

The company collects 20% of its sales COD(cash on delivery), 30% of the sales in the month following the sale, and 45% of the sales in the second month following the sale while 5% is considered unrecoverable.

In the month of August there is a cash inflow from the sales in the month of June and July. The two add up to give 0.3*231481.48 + 0.45*214334.70 = \$165895.05. In addition to this 20% of the sales in August are received as cash, this is \$50000. In the month of September, 45% of sales in July and 30% of sales in August are received in addition to 20% of the sales of September.

The gross inflow from sales in the month of August is \$215895.05. There is a one-time cash receipt of \$10000 that makes the gross inflow \$225895.05. The gross inflow from sales in September is 0.45*231481.48 + 0.3*250000 + 0.2*250000*1.05 = \$231666.67.

The gross inflow in August and September is \$457561.72

The outflows in the month of August are manpower costs of \$2000, 20% of sales which is \$50000, inventory purchases that are 35% of the following month's sales or 0.35*250000*1.05 = \$91875. In September, the outflows are manpower costs of \$2000, 20% of sales which is \$52500 and inventory purchases of 35% of next month's sales or \$96468.75. The outflows for the two months add up to \$294843.75

The net cash inflow in the two months is \$162717.97

As the starting cash at the beginning of August was \$20000, the ending cash in September is \$182717.97

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