| |cash budget | | | | |
| | |september |october |november |december |january |
|A/Rcash collection | |684 |1323 |779 |1604 |2265 |
|bank loan | | | |350 | | |
|total cash inflow | |$2,243 |$2,022 |$2,136 |$2,370 |$1,934 |
| | | | | | | |
|account payment | |948 |600 |600 |600 |600 |
|expences(not include interest and raw materials) |400 |400 ...view middle of the document...
25 |2701.25 |1000 |
| | | | | | | |
|beginging cash | |1559 |$699 |$1,007 |$766 |($332) |
ending cash | |$699 |$1,007 |$766 |($332) |$934 | |Group：Jeffrey Gui, Vincent Wang, JoshuaClifford, Matthew Gallagher
Assessment of Hampton Tool Repurchase：
The first step to assess this repurchase was to analyze whether we could remain financially healthy by accepting the loan. We analyzed this by calculating our cash flow by using their collection period of 30 days for accounts receivable and their payment period for accounts payable of 30 days. We also deducted from the cash balance the advance payment from General Aircraft Corporation from September to November. Using this cash flow statement we found that accepting this loan for the repurchase would lead to a negative cash balance in December (see Exhibit I) which means that technically Hampton Tool can not afford to take this loan. Therefore we believe that Hampton should have taken out a smaller loan and repurchased fewer shares. We believe that a lesser repurchase would be a wise choice to improve investor confidence. This smaller repurchase will allow the company to still show confidence in their operations but also to allow us to have a positive cash flow. Before the repurchase our shares outstanding would be 117,800 and EPS would be .53. After the repurchase shares outstanding would be 42,800 which would raise EPS significantly to 2.2. This repurchase would show executive confidence in Hampton tool because they believe that investing in themselves is better than other investing endeavors. Hampton is also possibly showing that they believe that their stock is undervalued so they are going to buy their stock at a discount and redistribute at a higher price.