Speak-On: Projecting Cash Budgets for a New Venture (Simplified Chinese version)
(5 pages of text)
In August 2018, the founder of Speak-On, was finalizing plans for his company’s first year of operations. Speak-On was a learning tool used in classrooms to help students improve their communication and public speaking skills. Having worked on developing a prototype all summer with financing from the Government of Ontario, the founder needed to understand the cash needs for his company. He planned to project a cash budget for fiscal year 2018 and do a sensitivity analysis on his projections to determine the amount of additional financing needed. Did Speak-On require external financing, and would the line of credit support the cash needed?
This case best serves as an introduction to students on cash budgeting for a managerial accounting or financial analysis course at the undergraduate level. The inflows and outflows are designed to be straightforward so that students focus on spreadsheet design. The case is a useful tool for introducing spreadsheet design. After completion of this case, students will be able to
- prepare a projected budget;
- estimate financing required in the first year of operations;
- use spreadsheet software to complete a cash budget;
- revise the budget to reflect an increase or decrease in sales;
- evaluate the different options presented in the case; and
- with thoughtful and appropriate support, make a recommendation about whether or not to continue the business.
Canada, Small, 2018
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