Cyrus Brown: Financial Management, Essay Example

Cyrus Brown needs a cash budget for his latest venture: Cyrus Brown Manufacturing (CBM). Using his projection, estimates the outcome of uncertainties as time progresses.

Cyrus finds the company will need a certain amount of outside financing. Based on a 2-ear analysis where variable revenues and expenses are averaged from the first nine months. The least line of credit that CBM will need is about $600,000. That is estimated from the greatest overages rounded to estimate interest.

CBM’s cash position during the budget period is typical for a start-up. Early months of operation usually constitute losses because of initial cost incurred and fluctuations in the consumer base. As initial costs are paid off and consumer loyalty stabilizes, enterprises’ bottom lines gradually move from red to the black. One concern for this company is the policy of keeping $50,000 cash on hand and maintaining $35,000 in administrative salaries. It might be more cost-effective to decrease these figures and work with a rolling line of credit with respect to material distributors. Having analyzed this question in the 2^nd projection, the difference in necessary credit does not decrease by even $100,000. This attests to the relative stability of the system over time.

If I was bank manager, I would want CBM as my client. It shows accountable stability over time. Graphic analysis indicates that a this projection demonstrates real profits with in the short-term. A bank could profit about $100,000 in 3 years. Both budgets are found on the first sheet of the attached spreadsheet. Formulas are on the second, and the graph is on the third. Using this projection, the outcome of uncertainties are estimated as time progresses.