Case Study: Budgeting

A new company, Apex, was started on December 1, 2013. Below are their sales forecast and other financial information. Based on this information, provide an financial analysis that includes the following:

1) Prepare an income statement budget.
2) Prepare a cash flow budget
3) Does the company have enough capitalization?
4) Which month does the company achieve positive cash flow?

Sales Forecast:

January 2014       $100,000
February              $150,000
March                  $200,000
April                    $200,000
May                    $300,000
June                   $300,000
July                    $300,000

...Each month thereafter

Salaries:              $30,000/month
Facilities:             $10,000/month
Admin:                $10,000/month

Cost of Goods Sold: 60% of sales

COGS cash disbursement 1 month prior to sale

No cash sales.

Receivables are collected as follows:

70% collected the following month of sales
20% two months after the sale
10% three months after the sale

Company has $250,000 in cash currently and a line of credit for $200,000.