A corporation has a 30 day average collection period and wishes to maintain a $
ID: 2744706 • Letter: A
Question
A corporation has a 30 day average collection period and wishes to maintain a $ 5 million minimum cash balance. Based on this and the following info answer questions 3-5. The company has quarterly budgets. Beginning receivables in Q1 are $120 Million. Sales for Q1 are $ 90M, Q2 120M, Q3 150M, Q4 120M. Cash disbursement for Q1 (80M) Q2 (160M) Q3 (180M) Q4 (160M). The company has a beginning cash balance of 5 million.
1. What is the ending receivables in the second quarter?
2. What is the net cash inflow in the 3rd quarter?
3. What is the cumulative surplus ( deficit ) in the fourth quarter?
Explanation / Answer
Solution.
1. What is the ending receivables in the second quarter?
$60 Million
2. What is the net cash inflow in the 3rd quarter?
$-45 Million
3. What is the cumulative surplus ( deficit ) in the fourth quarter?
- $75 Million
Particulars Q1 Q2 Q3 Q4 Beginning receivables 120 45 60 75 Sales 90 120 150 120 Cash Collection (165) (105) (135) (115) Ending Receivables 45 60 75 80 Total Cash Collection 165 105 135 115 Total Cash Dishbrushment (80) (160) (180) (160) net Cash Inflow 85 (55) (45) (45) Beginning cash balance 5 85 25 (25) Net Cash Inflow 85 (55) (45) (45) Ending Cash balance 90 30 (20) (70) Minimum cash balance (5) (5) (5) (5) Cunulative surplus/Deficit 85 25 (25) (75)Related Questions
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