pm.54r Agarwal, Incorporated, has a 50-day average collection period and wants to maintain a minimum cash balance of $35 million, which iswhat the company currently has on hand. The company currently has a receivables balance of $189 million and has developed thefollowing sales and cash disbursement budgets (in millions):SalesTotal cash disbursementQ1$ 378Q2$ 450Q3$ 531Q4$ 495268390617412Complete 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 inmillions rounded to the nearest whole million dollar amount, e.g., 32.AGARWAL, INCORPORATEDCash Budget(in millions)Q1Beginning receivablesSales$189378Cash collectionsEnding receivablesQ2450Q3531Q4495Total cash collectionsTotal cash disbursements268390617412Net cash inflowBeginning cash balanceNet cash inflowEnding cash balanceMinimum cash balanceCumulative surplus (deficit)

AGARWAL, INCORPORATED Cash Budget (in millions) Q1Q2Q3Q4Beginning…

Answered: Agarwal, Incorporated, has a 50-day…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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Agarwal, Incorporated, has a 50-day average collection period and wants to maintain a minimum cash balance of $35 million, which is what the company currently has on hand. The company currently has a receivables balance of $192 million and has developed the following sales and cash disbursement budgets (in millions): Sales Q1 $ 405 Q2 $ 477 Q3 $ 558 Total cash disbursement 279 415 652 Q4 $ 522 434 ed 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. AGARWAL, INCORPORATED Cash Budget (in millions) Q1 Q2 Q3 Q4 Beginning receivables 192 225 $ 265 $ 310 Sales Cash collections 405 477 558 522 372 437 513 542 Ending receivables EA $ 225 265 $ 310 $ 290 Total cash collections $ 372 437 $ 513 $ 542 Total cash disbursements 279 415 652 434 Net cash inflow $ 93 $ 22 $ 139 × $ 108 Beginning cash…
Agarwal, Incorporated, has a 40-day average collection period and wants to maintain a minimum cash balance of $30 million, which is what the company currently has on hand. The company currently has a receivables balance of $200 million and has developed the following sales and cash disbursement budgets (in millions): Q1 Q2 $ 477 $ 549 Total cash disbursement 349 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. Sales 491 Q3 $ 630 754 Q4 $ 594 488
Frosty Corp. has a minimum cash balance of PHP 100,000 and forecasted sales of PHP 1,000,000. Accounts receivable is expected to be 5% of sales while inventory is expected to be 15% of cost of sales. Gross profit ratio is 20%. Non-Current assets are budgeted at PHP 400,000. Questions: 1. How much is the total asset requirement? 2. How much is the Accounts receivable? 3. How much is the Inventory?
Tox ltd management expect the next three months from January to March 2018 to demand some unusual cash flows. A cash balance of R106 764 is currently on hand.1. Sales for December 2017: R1 339 200 2. Total sales forecasts are: • January 2018 R 669 600 • February 2018 R 892 800 • March 2018 R 781 200 •April 2018 R 892 800 3. 40% of all sales are on credit, while cash sales amount to 60% of total sales. 4. Cost of goods sold average 75% of sales. Inventory purchased during each month averages the cost of sales for the following month. The creditor payment period averages 15 days and goods are purchased consistently over the month. 5. Operating expenses are projected as follows: • Salaries and wages at 12% of sales paid in the month of the sale. • Other expenses at an average of 10%of sales paid in the month of the sale. • Cash receipts expected from repayment of a loan to an employee of R 22 320 due in March 2018. • Repayment of short-term loan of R11 160 is due in March 2018. •…
Suppose that Ken-Z Art Gallery has annual sales of $870,000, cost of goods sold of $560,000, average inventories of $244,500, average accounts receivable of $265,000, and an average accounts payable balance of $79,000. Assuming that all of Ken-Z's sales are on credit, what will be the firm's cash cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
(a) For the current year, Encor Ltd. had net sales of $450,000 and paid $260,000 for the cost of goods sold. They had average receivables of $130,000, average payables of $57,000, and an average inventory of $90,000. Calculate the Operating cycle and Cash cycle for Encor Ltd. Interpret the results. (b) Prepare a Cash Budget based on the info below for the year 2020 for the months of January, February, March, and April. - Encor Ltd., anticipates sales of $18,000 in January 2020, with anticipated growth of 10% per month; - Credit sales are paid 50% the same month and 50% the following month (credit sales for December 2019 was $14,000) - Credit purchases are paid 35% of sales; paid in the month they are incurred - Wages and expenses are 30% of sales every month; paid in the month they are incurred - In February, the company pays $27,000 cash for new equipment - The beginning cash balance is $13,000
Gerry Jacobs, a financial analyst for Best Value Supermarkets, has prepared the following sales and cash disbursement estimates for the period of August through December of the current year. Month Sales Cash Disbursements August P400 P300 September 500 500 October 500 700 November 600 400 December 700 500 90% of sales are for cash, the remaining 10% are collected one month later. All disbursements are on a cash basis. The firm wishes to maintain a minimum cash balance of $50. The beginning cash balance in September is $25. Prepare a cash budget for the months of October, November, and December, noting any needed financing or excess cash available.
Furles Inc. has hired you as a consultant to analyze their cash management policy and suggest the most efficient parameters. They have estimated their current daily variance of net cash flow to be $75,00O. Their bank requires them to maintain a minimum compensating balance in their account of $2,000. They have negotiated a fixed transaction cost with their broker of $15 per transaction and they are currently able to earn an annual return of 5% on their investment in marketable securities. Compute their optimal cash balance target (C*), optimal upper bound (U*) and lower bound (L), as well as the average cash balance (ACB) that they will have on hand so that you can also tell them their annual opportunity cost of maintaining the average cash balance. C* = U* = L = ACB = Annual Opportunity Cost ($) = %3D
1. Makmak Corporation uses the Baumol Cash Management Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total P432,000. The interest rate on marketable securities is 5% and P8 is the cost per transaction. What is the optimal Cash Balance of the company? 2. If Hot Tubs Inc. had annual credit sales of P2,027,773 and its days sales outstanding was equal to 35 days, what was its average A/R outstanding? (Use a 365-day year.)
Varsity Supplies & Things have indicated an industry requirement to maintain a minimum cash balance of $162,000 each month. He has also noted that management is very keen on keeping the gearing ratio of the business as low as possible and would therefore prefer to cushion any gaps internally using equity financing. Based on the budget prepared, will the business be achieving this desired target? What are three (3) internal strategies that may be employed by management to improve the organization's monthly cash flow and militate against or reduce any possible shortfall reflected in the budget prepared.
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Shulman Inc. has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle? Annual sales = $45,000 Annual cost of goods sold = $30,000 Inventory = $4,500 Accounts receivable = $1,800 Accounts payable = $2,500 a. 28 days b. 43 days c. 39 days d. 35 days e. 32 days

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