1. avatar says

    I do enjoy your lectures but i am not getting the %s used in Example one chapter 5. even the answers at the back are showing it the same way. For me 40% of 80000 is 32000. Please help me understand this. Thank you.

    • Profile photo of John Moffat says

      I assume you mean example 1 in Chapter 6?

      Also, I assume you are talking about the sales of 80,000 in November X1.
      40% of 80,000 is indeed 32,000. However they are the cash sales in November and therefore the cash would be received in November. We are preparing the cash budget for January onwards.

      It is only the credit sales in November where (because they are on credit) the cash will be received 2 months later – i.e. in January.

      So the cash receipts in January are the cash sales in January (40% x 110,000), plus the cash received from the credit sales made 2 months earlier (i.e. in November, so 60% x 80,000)

  2. avatar says

    For speculative motive isn’t better to be placed in a bank or buy short investment where one can get interest and dividend, whereas if one buy stock because its cheaper making savings one might say its like earning the interest and dividend, but what about the holding cost?

    • Profile photo of John Moffat says

      It really depends on the costs involved. The speculative motive is not saying that it is necessarily better – it is simply that if it is better then it is only possible if there is spare cash. There is no requirement to keep extra cash for the speculative motive – it is just a reason that some companies might choose to hold extra cash.

  3. Profile photo of chiclarence says

    Sir when i go through Kaplan i find that there are three methods by which cash forecasts can be prepared
    – receipts and paymens
    – balance sheet forcast
    – working capital ratios
    in the notes you treated only receipts and payments.
    are the other ones no longer part of the syllabus??

Leave a Reply