Date: 2/9/2014
Subject: Tyva
Background
Tyva produces a undyed cloth sandals. These come in two different styles standard and deluxe. The deluxe sells for $195.00 and the Standard for $120.00. The purpose of this brief is to review the May actual statements and determine the June budgeted cash flow. To identify and understand the ending cash balance of Tyva (Datar & Schoenbeck, 2013). Review the product sales mix, comparison of the monthly budget statements for significant changes. Finally, a recommendation will be given on how the net income can be improved based on the analysis.
Analysis
Based on the June cash budget, what are the relevant items that could impact the ending cash balance?
The Cash Inflow would come from
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Recommendations
The statement of cash flows explains the change during the period in cash and cash equivalents. Cash includes currency on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to cash (Flight. 2006). Because of this there are two recommendations for Tyva.
The first recommendation would be to change the Sales on Account terms to increase the amount of cash available for the same budget month. Providing discounts to customers that pay within 30 days would help support on time payment and additional operating cash flow for the current and following month. The second recommendation would be change their Accounts Payable terms to net 60 and pay half in the first month and the second installment in the following month. This will decrease the month-over-month Cash Outflow.
References
Datar & Schoenebeck (2013). Franklin University (Managerial Accounting/Interpreting and Analyzing Financial Statements). Boston: Pearson Prentice Hall.
Flight, A. (2006). Cash Flow Forecasting. Burlington, MA : Elsevier Butterworth-Heinemann
Appendix
5 – Step Decision
5-Step Critical Thinking Decision-Making Process Matrix
Tyva
Step 1: Identify the problem(s) and uncertainties.
What exactly is the problem…
There is a need to create a Cash
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