BlueSky Co. is conducting its September cash budget. It has the following inform

Question

BlueSky Co. is conducting its September cash budget. It has the following information, and wants you to help them to estimate their total financing. (To earn credit, you MUST show all your calculations.) The projected total cash receipts in September are $22million, its projected cash disbursements in that month are $27million. The company's beginning cash balance in September will be $3million, and they desire to keep a minimum cash balance of $1million. Calculate the company's net cash flow, the cash balance, and its required total financing. (Hint: you can use the simplified cash budget table to do the calculations)

Explanation / Answer

Answer to Part a)

Company's Net Cash Flow = Receipts - Payments

Company's Net Cash Flow = 22 million - 27 million

Company's Net Cash Flow = (5) Million

Answer to Part b)

Cash Balance = Opening Balance + Receipts - Payments

Cash Balance = 3 million + 22 million - 27 million

Cash Balance = (2) Million

Answer to part c)

Required Financing:

Cash Closing Balance = Opening Balance + Receipts - Payments + Amount financed

1 million = 3 million + 22 millions - 27 millions + Amount financed

3 millions = Amount Financed

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