Cash Flow Management for Coach Inc.

The assignment involves preparing various accounts and statements for Coach Inc., including profit and loss accounts, balance sheets, cash budgets, and cash flow statements for September and October 2018, as well as a cash budget and cash flow statement from September to February 2019. The solution demonstrates the importance of managing cash flows effectively to meet regular operational activities and increase productivity.

Managerial Finance

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Profit and loss account................................................................................................................3
Cash flow....................................................................................................................................3
Balance Sheet..............................................................................................................................4
Cash Budget................................................................................................................................5
Cash flow....................................................................................................................................6
Report for the managing directors..............................................................................................7
CONCLUSION ..............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Managerial finance is a tool which help to analyse the effective management of finance
in the organisation. It has various techniques which help the company to improve its financial
position and minimise the losses. In this report chosen organisation is Coach Inc. This present
assignment covers following topics- profit & loss account, balance sheet, cash budget and cash
flow. Apart from this, it also includes report for the managing director to analyse the financial
and non-financial factors in cash flow statement.
MAIN BODY
Profit and loss account
Profit and loss account helps to know the net profit and net loss over a period of time. It
shows the ability of an organisation to earn profits by reducing the expenses. In this account
expenses are recorded in debit side and revenues are recorded in credit side (Bezzina and Grima,
2012). Through it Coach Inc. can know the net profit or net loss during the year 2018.
Trading Account of coach Inc. (September & October)
Particular September October Particular September October
To Opening balance 19200 7500 By Sales 29000 30500
To Purchase 8600 8600 By closing stock 7500 5250
To direct expenses
(B/F) - 10500
To Gross Profit 8700 9150
Total 36500 35750 Total 36500 35750
Profit and Loss account of Coach Inc. (September & October)
Particular September October Particular September October
To Salaries and wages 2900 2900 By Gross profit 8700 9150
To Overheads and utilities 5600 5600 By Net loss 12483 12258
To Selling and
administrative 4350 4575
To Interest payable 1333 1333
To Depreciation 7000 7000

21183 21408 21183 21408
Interpretation- Coach Inc. gas earned $ 40500000 gross profit as per the information
available in trading account. In the profit and loss account all adjustments are shown like-
overheads has been occurred $ 11200000 and depreciation has been charged of $ 14000000. Net
loss of Coach Inc. is $ 7425000 for September and October 2018 (Bozcuk, 2012).
Balance Sheet
Balance sheet helps to know the true and fair picture of an organisation. It is an important
part of financial statement of company which includes assets and liabilities. It shows the
financial position of Coach inc for September and October 2018.
Balance sheet of Coach inc. for September and October 2018
Particulars Amount ($) AmoCash
flowunt ($)
Amount ($)
Fixed Assets
Fixed assets at cost 69800000
Depreciation 14000000
55800000
Current Assets
Stocks 6200000
Accounts Receivable 59500000
Other Assets 84476000
Bank and Cash 44075000
Total Assets 194251000
Current Liabilities
Accounts Payable 17200000

Short term loans 12500000
Accruals 2176000
Corporation tax payable 5000000
36876000
Net Current Assets 157375000
Total assets less current Liabilities 213175000
Long term Loans 130600000
Net Assets 82575000
Capital and Reserves
Share capital 90000000
Profit and loss account(Net profit) 74252000
82575000
Interpretation- Balance sheet of Coach inc. shows that Fixed assets is $ 55800000 after
deduction of depreciation. Other current assets are $ 194251000 it shows that it is increasing in
September and October 2018. Current liabilities are $ 36876000 and it shows that it decreasing
in September and October 2018. Capital reserve and net current assets are equal so it is balanced
(Chan and Wong, 2016).
Cash Budget
Cash budget is prepare for analysing the cash inflows and outflows over a period of time.
It helps to know that company has enough cash to operates its regular activities in the business.
If organisation has sufficient cash then it can easily perform its routine operations.

Working note:
Sales
Months Sep Oct Nov Dec Jan Feb
22500 56000 30500 32500 35000 36500
Purchase
Months Sep OctCash
flow
Nov Dec Jan Feb
10000 9000 8600 8600 8600 8600
Selling &
Administration
Months Sep Oct Nov Dec Jan Feb
4350 4575 4550 4900 4745 4940
Interpretation:
Cash budget of Coach inc. shows that it has total cash receipt of $ 113080000 which is
increasing every month from September to February. It has a cash payments of $ 22040000
which are fluctuate every month from September to February. At the end it has total cash

balance of $ 91040000 and it is increasing every month from September to February. It shows
that Coach inc. has sufficient cash to meet its regular operational activities (Gay, 2016).
Cash flow
Cash flow statement helps to know that how much cash a company have. It helps to
know the inflow and outflow of cash during a particular year. It has divided into three activities:
 Cash flow from operational activities: It shows the how much cash a company can
earn through operational activities. Operational activities like- accounts receivables and
accounts payables (Schellhorn and Sharma, 2013).
 Cash flow from investing activity: It helps to know that how much cash a company can
earn from its investments.
 Cash flow from financing activity: It helps to know that how much cash an
organisation can receive from the financing activities. Financing activities can be related
to shares and debentures.
Working note-Sale of September is= 0(Due to lack of following 60 days debtors policy)
Interpretation- From the above table, it has been shown that Coach inc. has cash
receipts in September $ 10500000 and in February it has $ 63580000. It shows that it is
increasing every month and it is goof for the company. Cash payments in September $ 22850000
and in February it has $ 22040000 which shows that it is not much fluctuating in all six months.
At the end total cash for the month February is $ 41540000 as which is higher than the months

of September to January. It shows that Coach inc. has sufficient cash for its regular operational
activities (Gottardo and Maria Moisello, 2014).
Recommendation and suggestions:
Coach inc. can increase its time to make payments to its supplies and reduce the time to
take payments from its debtors so that they can take the time period advantage. It helps the
company to receive sufficient cash to meet its day to day operational activities. Coach inc. does
for need to depend for loan because it has sufficient cash. It does not make to payment for
interest to outsiders.
Report for the managing directors
After evaluations and analyses of cash flow and cash budget. it has been shown that
Coach inc. should reduce the time for its debtors collection policy. The time period is 60 days
but they are not getting their money on time from its suppliers (Kopparthi and Kagabo,
2012).They reduce the collection time from 60 to 45 days but it also not working because they
are not receiving money on time. If Coach inc. allow more time to the debtors then they will pay
late and it can influence the cash balance of company. It will be not beneficial for the
organisation. For the effective cash balance it is necessary to make payments on time and collect
payments on time.
If cash flow is not properly maintained by the company then operating, financing and
investing activities will also affected from it (Oehler and Wendt, 2013). For the effective cash
flow management it is necessary for the Coach inc. to make balance between receipts and
payments. It can help to meet regular operational activities in the company and through it
productivity can also be increase.
CONCLUSION
From the above report, it has been concluded that managerial financing is essential for
preparing financial statements of the organisation. It has various methods and techniques which
can be used for the preparation of financial statements of company. In this assignment chosen
organisation is Coach. Inc. which wants to prepare various accounts and statements to know its
financial position. These accounts and statements are – Profit and loss account and balance sheet
for September and October 2018, cash budget and cash flow for the months September to
February 2019. It can helps the company to maintain its cash balance.