Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN: 9781285867977
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Chapter 16, Problem 11SP
a.
Summary Introduction
To prepare: A monthly cash budget for the last 6 months of 2015.
Working capital:
Working capital speculation is the measure of cash, require to extend business, meet here and now business obligations and cover costs of doing business.
Cash budget:
A money spending plan is an estimation of the money inflows and outpourings for a business over a particular timeframe. This financial plan is utilized to evaluate whether the substance has adequate money to work.
b.
Summary Introduction
To prepare: The monthly estimated required financing or excess fund.
c.
Summary Introduction
To determine: The effect on the cash budget, if cash budget is prepared under the assumptions and steps which make the financial requirement valid under the assumptions.
d.
Summary Introduction
To determine: The changes in the current and debt ratio during the year with calculation and explain whether the changes in the ratios affect the ability of the firm to get bank credit.
Summary Introduction
To determine: The sensitivity analysis that shows the effect of the two factors on the maximum loan requirement.
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The Chapter 8 Form worksheet is to be used to create your own worksheet version of the Review Problem in the text.
Requirement 2:
The company has just hired a new marketing manager who insists that unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget:
a. What are the total expected cash collections for the year under this revised budget?
b. What is the total required production for the year under this revised budget?
c. What is the total cost of raw materials to be purchased for the year under this revised budget?
d. What are the total expected cash disbursements for raw materials for the year under this revised budget?
e. After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 90,000 units in any one quarter. Is this a potential problem?
1. Oni Pty Ltd Limited has prepared its June half-year cash budget. The cash budget shows a healthy cash balance at the end of the period, however negative cash balances are forecast throughout February and March.
Which of the following strategies would be appropriate to address this short-term cash problem?
A.Any of these strategies would be appropriate to address this short-term cash problem.
B.Arrange an overdraft facility with its bank.
C.Sell its goods on a cash-only basis.
D.Raise additional capital via a share issue.
E.Realise some non-current assets.
2.Oni Pty Ltd sells it goods at a 50% mark-up. A review of the variance report reveals the following:
A favourable variance in Sales revenue of 8%
An unfavourable variance in Cost of sales of 5%
Which of the following statements is correct?
A.The actual mark-up % was greater than forecast and management will be pleased with the cost of sales variance.
B.The actual mark-up % was greater than forecast and management will be…
I'm working on a Cash Budget "Helen bowers" and get stuck on the question: 4) Assume that receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows are paid on the 5th of the month. Will this have an effect on the cash budget – in other words, would the cash budget you have prepared be valid under these assumptions? If not, what can be done to make a valid estimate of the peak financing requirements? No calculations or spreadsheet work is required, though calculations could be used to illustrate the effects
Chapter 16 Solutions
Fundamentals of Financial Management (MindTap Course List)
Ch. 16 - What are some pros and cons of holding high levels...Ch. 16 - Prob. 2QCh. 16 - What are the two definitions of cash, and why do...Ch. 16 - Prob. 4QCh. 16 - What are the four key factors in a firm's credit...Ch. 16 - Prob. 6QCh. 16 - Why is some trade credit called free while other...Ch. 16 - Define each of the following loan terms, and...Ch. 16 - Why are accruals called spontaneous sources of...Ch. 16 - Indicate using a (+), (), or (0) whether each of...
Ch. 16 - CASH CONVERSION CYCLE Primrose Corp has 15million...Ch. 16 - RECEIVABLES INVESTMENT Lamar Lumber Company has...Ch. 16 - COST OF TRADE CREDIT AND BANK LOAN Lamar Lumber...Ch. 16 - CASH CONVERSION CYCLE Zocco Corporation has an...Ch. 16 - RECEIVABLES INVESTMENT McDowell Industries sells...Ch. 16 - WORKING CAPITAL INVESTMENT Prestopino Corporation...Ch. 16 - CASH CONVERSION CYCLE Christie Corporation is...Ch. 16 - CURRENT ASSETS INVESTMENT POLICY Rentz Corporation...Ch. 16 - Prob. 9PCh. 16 - CASH BUDGETING Helen Bowers, owner of Helens...Ch. 16 - Prob. 11SPCh. 16 - MANAGING CURRENT ASSETS Dan Barnes, financial...
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