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.