Management and Cost Accounting - Essay Example

Short-term cash deficits can be obtained from lending institutions such as banks in the form of overdrafts in which repayment involves paying some interest (Brigham & Houston, 2004).
Question 2: Minimum line of credit
The minimum line of credit is the amount of money that can be allocated and made available whenever a client company needs it (Fabozzi & Peterson, 2003). BCM has shown that it needs $241,500 in June. This should be the minimum line of credit from the spreadsheet.

Question 3: CBM’s cash position
CBM’s cash position is quite strained, especially in the first four months. CBM is forced to seek additional financing from outside. This is due to low cash receipts from debtors who have formed the main source of cash in the budget. The concern for the company is how to obtain extra external financing and what interest will be needed (Pineda, 2006). The cash budget also does not have a provision for repaying the short loan and interest.

Question 4: Bank Manager
As a bank manager, I will not accept CBM as my client for some reason The first one is that CBM is a new venture which has not sold even one item, and therefore the market is new. CBM needs a total of $415,250 just within the first four months. According to Bierck (2009), such an undertaking is risky since CBM does not have any historical figures which can give a clue of how much sales they can be able to generate The other point is that there is no reference for the sales forecast. I will only accept CBM once they have traded and have historical figures to rely on in respect of the forecast. Read More