HGR CO

I presume you are happy with the Receipts and payments…that gives net cash flow along with overdraft int in pd 1-3 and bond int in pd 2 and capital investment on pd3.
You have to calculate monthly bank overdraft interest
So it’s 1 + rate to the power of 1/12 = 1.0617^1\12 = This is 0.5%

So O/d is 3.8m that makes it 19k for pd 1
So O/d is 3,549m and so that makes it 18k for pd2
So O/d is 3,517m and makes it 18k in pd 3

The cl bal becomes the op of the next period so cl for 1 is 3,549 as above and so on
in pd 2 there is 200 int on bonds to deduct so it’s net cash flow

If action is taken
Same again but you put the monthly reduction in accounts receivable of 270 and reduction in inventory of 204
But now the overdraft will be lower as the rec & inv lower outstanding balances
So the closing bal in pd 1 is 3,075 so this becomes the opening of the next and so on.

So the current accounts receivable days = (8,775/49,275) x 365 = 65 days
Reduction in days over six months = 65 – 53 = 12 days
Monthly reduction = 12/6 = 2 days

Each receivables day is equivalent to 8,775,000/65 =$135,000
(Alternatively, each receivables day is equivalent to 49,275,000/365 =$135,000)
Therefore the monthly reduction in accounts receivable = 2 x 135,000 = $270,000

Reduction in inventory days
Current inventory days = (8,160/37,230) x 365 = 80 days
Each inventory day is equivalent to 8,160,000/80 = $102,000
(Alternatively, each inventory day = 37,230,000/365 = $102,000)
Therefore the monthly reduction in inventory = 102,000 x 2 = $204,00