Cash-Flow Projection
Assume that you are planning a venture that will specialize in house-painting services.
The following list represents your projected sales and expenses for the first six months
of operations:
Estimated Sales – an average job is $400; 6 jobs projected for April, 18 for May, 24.5
for June-July, 14.5 for Aug., and 4 for Sept.
Purchase of Equipment - $4500 for a used pickup truck, $300 for ladders, $200 for
brushes and rollers
Rental of Equipment - $150/month for sprayer and extension ladder (cost decreases to
$100 in Aug. and $50 in Sept.)
Labour Expenses – estimated to be $400 for April, $3200 for May, $4800 for June-July,
$1200 for Aug., and $300 for Sept.
Personal Drawings – money taken out of the business by the owner ($100 in April,
$400 in May, $500 in June-July, $300 in Aug., $200 in Sept.)
Materials - $600 for paint and primer in peak months (June/July), $400 in May and Aug.,
and $200 in slow months
Business Licenses - $20 fee to register company
Advertising – will be heaviest early in the season ($300 in April, $200 in May-June,
$100 in July); no advertising will be done after July
Insurance - $1500 will be paid annually for the truck and business liability; this will be
paid in one lump sum at the start of the fiscal year
Office Expenses - $400 for phone and answering machine in April, $100 for May-Aug.,
$0 in Sept.
Other Expenses – allowance for gas and truck repairs ($250 in April, $200 in May, $500
in June, $400 in July, $150 in Aug., $100 in Sept.
Use the sales and expenses above to project the cash-flow for the house-painting
business. Assume all purchases will be made on a cash basis. Use the chart provided
on the opposite side of the page.
A Cash-Flow Projection for a House-Painting Service
April
Cash In
Estimated Sales of
Goods and Services
Cash Out
Equipment Purchases
Rental Expenses
Labour Expenses
Personal Drawings
Materials
Business Licenses
Advertising
Insurance
Office Expenses
Other Expenses
Total
Net Cash
(Cash In-Cash Out)
Monthly Surplus
Monthly Deficit
Cumulative (to date)
May
June
July
Aug
Sept
Total
April
May
June
July
Aug
Sept
Total
Cash In
Estimated Sales of
2400
7200
9800
9800
5800
1600
36600
5000
0
0
0
0
0
5000
Rental Expenses
150
150
150
150
100
50
750
Labour Expenses
400
3200
4800
4800
1200
300
14700
Personal Drawings
100
400
500
500
300
200
2000
Materials
200
400
600
600
400
200
2400
20
0
0
0
0
0
20
Advertising
300
200
200
100
0
0
800
Insurance
1500
0
0
0
0
0
1500
Office Expenses
400
100
100
100
100
0
800
Other Expenses
250
200
500
400
150
100
1600
8230
4650
6850
6650
2250
850
29570
2550
2950
3150
3550
750
12950
Goods and Services
Cash Out
Equipment Purchases
Business Licenses
Total
Net Cash
(Cash In-Cash Out)
Monthly Surplus
Monthly Deficit
-5920
Cumulative (to date)
-5920
-5920
-3370
-420
2730
6280
7030
7030