Is anyone doing Cash Management?

Kelly7
Kelly7 Well-KnownRegistered Posts: 218
Hi all

Our college chose our optional units for us and one of these was cash management. We have only had about 4 lessons on this 'as we did it last year' but I don't remember last years assessment being the same as the things that are in these practise assessments. I was wondering if anyone could offer any help in working out the answers to either of the practise assessments. I have got the answers up at the same time but it doesn't help if I can't work out how they're getting there. There isn't much chance to go and ask the teachers for help as they are running revision classes now for people who have re-takes.

Really stressing out with this. Not sure how any of us are going to pass with such little teaching :(

Kelly

Comments

  • Nps
    Nps Experienced Mentor Registered Posts: 782
    I think your best option is to bite the bullet and buy one of the text books so you can teach yourself. I don't think just going through the practice assessments will be enough to pass the exam. I used the BPP books and passed cash management comfortably without any taught classes - I promise you it is possible.
  • Kelly7
    Kelly7 Well-Known Registered Posts: 218
    Unfortunately my exam is on a couple of weeks and by the time I get it I won't get much use. Would you mind seeing if you know how to work out this one which I can't understand. It says... A company pays it's suppliers on the basis of 20% the month of purchase, 50% 2 months after purchase and the remaining 30% the month after that. At the end of month 3 the trade payable is forecast to be made up of Balance from month 1 = 15,200 Balance from month 2 = 36,000 Balance from month 3 = 98,000 Total payable at end of month 3 = 149,700 Show the amounts of the above trade payable at the end of month 3 that are forecast to be paid in months 4 and 5. I've seen this type of question a lot and even from the answers I can't work it out. Thank you Kelly x
  • CeeJaySix
    CeeJaySix Well-Known Registered Posts: 645
    Kelly,

    I didn't take CM at Lvl 4, however this looks like it should be fairly logical:

    In month 4, the balances will be made up of:
    Month 1 - 30%
    Month 2 - 30% + 50% = 80%
    Month 3 - 30% + 50% + 20% = 100%

    Payable in month 4:
    Month 1 - 30%
    Month 2 - 50%
    Month 3 - 20%

    Remember when you're working out the amount payable that you haven't got 100% in most; so you're actually paying all the month 1 outstanding balance, 50/80 of the month 2 balance, and 20/100 of the month 3 balance.

    That seems to make sense, does that get you anywhere near the answer?
    You could also extrapolate the %ages to get back to what the original purchases in each month were.
  • Kelly7
    Kelly7 Well-Known Registered Posts: 218
    Thanks ceejay. I printed this off at work today but for month 4 I can see the 30% for month 1 but why is there 50% and 30% for month 2 and is this both if the month 2 figure? I have a worked example on one practise of dividing 2 figures instead of percentages but I didn't get it them either :/ X
  • Kelly7
    Kelly7 Well-Known Registered Posts: 218
    Sorry for the lack of spaces in my messages btw. My phone doesn't seem to accept my new lines when posting the messaged
  • CeeJaySix
    CeeJaySix Well-Known Registered Posts: 645
    Kelly, again I haven't studied CM so I may be way off the mark. However the way I read it is that in month 4, the outstanding balance for month 2 of 36,000 is going to be made up of the 50% payable 2 months after purchase and the 30% due after 3 months. The 20% has already been paid in (in month 3) and therefore doesn't form part of the outstanding balance.

    Therefore the amount payable on the month 2 balance during month 4 will be 50/80 x 36,000. The remaining 30/80s will be payable in month 5.

    Total payable in month 4:

    15,200 payable in full
    36,000 x 50/80
    98,000 x 20/100

    If that's not correct then it's clearly not as straightforward as it first appears, and I'm afraid without having studied the subject I have no idea!
  • Kelly7
    Kelly7 Well-Known Registered Posts: 218
    Aww thank you for your help. I've just checked and you have done it correct. You can get it and you haven't even done it and I still can't understand it. I appreciate your help. Think this is just one of those that I'm not going to get. Thanks again. Kelly xx
  • CeeJaySix
    CeeJaySix Well-Known Registered Posts: 645
    Kelly,

    I think as soon as this clicks for you you'll have no problem, it is logical. Set it out in a table to help you:




    Month 1
    Month 2
    Month 3
    Month 4
    Month 5
    Month 6












    Month 1 balance

    20%
    50%
    30%




    Month 2 balance


    20%
    50%
    30%



    Month 3 balance



    20%
    50%
    30%



    So you can see that at the end of month 3, 70% of the balance from month 1 has already been paid. That means the balance outstanding is only 30% of the original total.
    Similarly, 20% of the balance from of the month 2 balance has been paid, leaving 80% of the original total.
    None of the month 3 balance has been paid yet.

    Hopefully now you can see that in month 4, all of the month 1 balance you have been given must be paid, 50/80 of month 2 must be paid, and 20/100 of month 4 must be paid.

    If you're not comfortable with that, try using the table to get back to what the original amounts for each month were. So to get back to the month 1 original figure, you would take the outstanding amount, divide it by the 30% that remains, and multiply it by 100. For month 2, this would be the outstanding amount / 80% remaining x 100. Once you have those original figures, you can just use normal percentages to work out what should be paid in each month.
  • Kelly7
    Kelly7 Well-Known Registered Posts: 218
    Omg! I can't believe you have taken the time to tape out that table and response for me. That is so nice. Thank you so much. I am going to work through it tomorrow with my packs and hopefully it will sink in. Thank you again. I'm really grateful! Xx
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