Three reasons for the firm to hold cash. Introduction: Holding cash arises when the cash inflow exceeds cash outflow , and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

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Chapter 26.6, Problem 1CC

Summary Introduction

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

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Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

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Answer 2

Question

Chapter 26.6, Problem 1CC

Summary Introduction

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

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Answer 3

Question

Chapter 26.6, Problem 1CC

Summary Introduction

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

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Answer 4

Question

Chapter 26.6, Problem 1CC

Summary Introduction

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

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Answer 5

Chapter 26.6, Problem 1CC

Summary Introduction

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

Answer 6

Chapter 26.6, Problem 1CC

Summary Introduction

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

Answer 7

Chapter 26.6, Problem 1CC

Summary Introduction

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

Answer 8

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Answer 10

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Answer 11

Ch. 26.1 - What is the firms cash cycle? How does it differ...Ch. 26.1 - How does working capital impact a firms value?Ch. 26.2 - Prob. 1CC Ch. 26.2 - Prob. 2CC Ch. 26.3 - Prob. 1CC Ch. 26.3 - Prob. 2CC Ch. 26.4 - What is accounts payable days outstanding?Ch. 26.4 - What are the costs of stretching accounts payable?Ch. 26.5 - What are the benefits and costs of holding...Ch. 26.5 - Prob. 2CC

Three reasons for the firm to hold cash. Introduction: Holding cash arises when the cash inflow exceeds cash outflow , and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

Solution Summary: The author explains the three main reasons for a firm to hold cash: transaction balance, precautionary balance and compensation balance.

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

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Chapter 26 Solutions

Three reasons for the firm to hold cash. Introduction: Holding cash arises when the cash inflow exceeds cash outflow , and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

Solution Summary: The author explains the three main reasons for a firm to hold cash: transaction balance, precautionary balance and compensation balance.

To discuss: Three reasons for the firm to hold cash. Introduction: Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.

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Chapter 26 Solutions

To discuss: Three reasons for the firm to hold cash.

Introduction:

Holding cash arises when the cash inflow exceeds cash outflow, and vice versa. This may thrust the firm to a certain and an uncertain situation. To balance these situations, the firm lends to hold cash.