Green Company uses the Baumol model to manage its disbursement account. Monthly cash disbursement is P1,200,000. Cash in this account could have earned 5% on money marketable securities. Green incurs P576 every time cash is transferred to this account. The optimum cash balance is A. 576,000.00 B. 166,276.88 C. 124,707.66 D. 432,000.00
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Green Company uses the Baumol model to
manage its disbursement account. Monthly
cash disbursement is P1,200,000. Cash in this
account could have earned 5% on
marketable
every time cash is transferred to this account.
The optimum cash balance is
A. 576,000.00
B. 166,276.88
C. 124,707.66
D. 432,000.00
Optimum Cash balance: It refers to that cash amount where total cost of the firm is lowest and opportunity cost of firm is equal to its transaction costs. It is the part of the cash management where two models are given to find out the optimum cash balance. One is Baumols model of cash management and other one is miller-orr model.
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- Accounts Receivable Balance XYZ Corp sells widgets to consumers for $20 each. Its beginning accounts receivable balance was $24,975, and it sold 12,376 widgets throughout the year. The total cash collections for the year amounted to $217,750. Required: Calculate the ending accounts receivable balance.Smoltz Company reported the following information for the current year: cost of goods sold, $252,500; increase in inventory, $21,700; and increase in accounts payable, $12,200. What is the amount of cash paid to suppliers that Smoltz would report on its statement of cash flows under the direct method? a. $218,600 c. $262,000 b. $243,000 d. $286,400Blue Corporation requires a P150,000minimum cash balance on its:checkingaccount. Based on the control limit model, itsspread should be P120,000. If as of the end ofthe day, the cash balance is P30,000, it shouldinfuse cash or (invest in marketablesecurities) amounting to : a. 160,000b. 190,000c. 240,000d. 120,000
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