Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN: 9780357296776
Author: Eugene F. Brigham, Michael C. Ehrhardt
Publisher: Cengage Learning US
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Chapter 16, Problem 16MC

In an attempt to better understand RR’s cash position, Johnson developed a cash budget for the first 2 months of the year. She has the figures for the other months, but they are not shown. After looking at the cash budget, answer the following questions:

  1. 1. What does the cash budget show regarding the target cash level?
  2. 2. Should depreciation expense be explicitly included in the cash budget? Why or why not?
  3. 3. What are some other potential cash inflows besides collections?
  4. 4. How can interest earned or paid on short-term securities or loans be incorporated in the cash budget?
  5. 5. In her preliminary cash budget, Johnson has assumed that all sales are collected and thus that RR has no bad debts. Is this realistic? If not, how would bad debts be dealt with in a cash budgeting sense? (Hint: Bad debts will affect collections but not purchases.)

Chapter 16, Problem 16MC, In an attempt to better understand RR’s cash position, Johnson developed a cash budget for the first

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I have a finance team at work. As the year progresses, they need to maintain a record of cash flow and expenditure. What will they be required to do as a first step to building a budget? Question 1Select one: A. Find out the balance sheet of the company B. Find the profit and loss for the previous year C. Identify the expenditure and demand along with the cash flow of the company D. Build an income and expenditure statement Incorrect
Using the same above information, what would it look like to complete the following? Schedule of cash payments for direct materials.Cash budget.Budgeted income statement for entire second quarter (not monthly).
A cash flow budget can be used to   A.    estimate when and how much money will need to be borrowed                   during the year     B.    estimate when and how much debt can be repaid during the year   C.    estimate when excess cash may be available so plans can be made to           invest it    D.   all of the above

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Financial Management: Theory & Practice

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