Question
Does the cash budget based on the given parameters provide thefirm with the liquidity in needs in meeting operations for thequarter (and why)?
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Cash Collections Schedule |
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May |
June |
July |
August |
September |
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Sales |
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$ 15,000 |
$ 16,000 |
$ 18,000 |
$ 24,000 |
$ 28,000 |
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Cash |
30% |
$ 4,500 |
$ 4,800 |
$ 5,400 |
$ 7,200 |
$ 8,400 |
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Credit |
70% |
$ 10,500 |
$ 11,200 |
$ 12,600 |
$ 16,800 |
$ 19,600 |
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A/R Schedule |
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From credit sales |
May |
June |
July |
August |
September |
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May |
$ 2,100 |
$ 7,350 |
$ 1,050 |
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June |
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$ 2,240 |
$ 7,840 |
$ 1,120 |
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July |
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$ 2,520 |
$ 8,820 |
$ 1,260 |
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Aug |
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$ 3,360 |
$ 11,760 |
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Sept |
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$ 3,920 |
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Total Cash Collections |
$ 2,100 |
$ 9,590 |
$ 11,410 |
$ 13,300 |
$ 16,940 |
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Cash Sales |
$ 4,500 |
$ 4,800 |
$ 5,400 |
$ 7,200 |
$ 8,400 |
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Total Cash Collected |
$ 6,600 |
$ 14,390 |
$ 16,810 |
$ 20,500 |
$ 25,340 |
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What is the impact of interest rate changes on the a) the budgetas proposed, and b) the CFOs request for higher minimum cashbalance?
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