Question

Does the cash budget based on the given parameters provide thefirm with the liquidity in needs in meeting operations for thequarter (and why)?

Cash Collections Schedule

 

 

 

 

 

 

 

May

June

July

August

September

 

Sales

 

$    15,000

$          16,000

$      18,000

$        24,000

$      28,000

 

 

 

 

 

 

 

 

 

Cash

30%

$      4,500

$            4,800

$         5,400

$         7,200

$         8,400

 

Credit

70%

$    10,500

$          11,200

$      12,600

$        16,800

$      19,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A/R Schedule

 

 

 

 

 

 

 

From credit sales

May

June

July

August

September

 

 

May

$      2,100

$            7,350

$         1,050

 

 

 

 

June

 

$            2,240

$         7,840

$         1,120

 

 

 

July

 

 

$         2,520

$         8,820

$         1,260

 

 

Aug

 

 

 

$         3,360

$      11,760

 

 

Sept

 

 

 

 

$         3,920

 

 

 

 

 

 

 

 

 

Total Cash Collections

$      2,100

$            9,590

$      11,410

$        13,300

$      16,940

 

Cash Sales

$      4,500

$            4,800

$         5,400

$         7,200

$         8,400

 

 

 

 

 

 

 

 

 

Total Cash Collected

$      6,600

$          14,390

$      16,810

$       20,500

$      25,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

               

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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