Agarwal, Incorporated, has a 30-day average collection period and wants to maintain a minimum cash balance of $20 million, which is what the company currently has on hand. The company currently has a receivables balance of $187 million and has developed the following sales and cash disbursement budgets (in millions): Sales Total cash disbursement Beginning receivables Sales Cash collections Ending receivables Total cash collections Total cash disbursements Net cash inflow Beginning cash balance Net cash inflow Q1 $360 320 Ending cash balance Minimum cash balance Cumulative surplus (deficit) Q2 $ 432 388 Complete the following cash budget for the company. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in millions rounded to the nearest whole million dollar amount, e.g., 32. $ Q1 Q3 $ 513 617 AGARWAL, INCORPORATED Cash Budget (in millions) 187 360 04 $ 477 391 320 Q2 432 388 Q3 513 617 Q4 477 391

Agarwal, Incorporated, has a 30-day average collection period and wants to maintain a minimum cash balance of $20 million, which is what the company currently has on hand. The company currently has a receivables balance of $187 million and has developed the following sales and cash disbursement budgets (in millions): Sales Total cash disbursement Beginning receivables Sales Cash collections Ending receivables Total cash collections Total cash disbursements Net cash inflow Beginning cash balance Net cash inflow Q1 $360 320 Ending cash balance Minimum cash balance Cumulative surplus (deficit) Q2 $ 432 388 Complete the following cash budget for the company. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in millions rounded to the nearest whole million dollar amount, e.g., 32. $ Q1 Q3 $ 513 617 AGARWAL, INCORPORATED Cash Budget (in millions) 187 360 04 $ 477 391 320 Q2 432 388 Q3 513 617 Q4 477 391

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Agarwal, Incorporated, has a 30-day average collection period and wants to maintain a minimum cash balance of $20
million, which is what the company currently has on hand. The company currently has a receivables balance of $187
million and has developed the following sales and cash disbursement budgets (in millions):
Sales
Total cash disbursement
Beginning receivables
Sales
Cash collections
Ending receivables
Total cash collections
Total cash disbursements
Net cash inflow
Beginning cash balance
Net cash inflow
Q1
$360
320
Ending cash balance
Minimum cash balance
Cumulative surplus (deficit)
Q2
$ 432
388
Complete the following cash budget for the company.
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your
answers in millions rounded to the nearest whole million dollar amount, e.g., 32.
$
Q1
Q3
$513
617
AGARWAL, INCORPORATED
Cash Budget
(in millions)
187
360
Q4
$ 477
391
320
Q2
432
388
Q3
513
617
Q4
477
391

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