Monthly minimum and maximum ending cash balances

Reference no: EM131316930

Berlin Inc. expects sales of $300,000 during each of the next three months. It will make monthly purchases of $180,000 during this time. Wages and salaries total $30,000 per month plus 5 percent of monthly sales.

The firm expects to make a tax payment of $60,000 in the first month and a $45,000 purchase of fixed assets in the second month and to receive $24,000 in cash from the sale of an asset in the third month. All sales and purchases are for cash. Beginning cash and the minimum cash balance equal zero.

a. Construct a cash budget for the next three months.

b. Berlin is unsure of the level of sales, but all other figures are certain. If the most pessimistic sales figure is $240,000 per month and the most optimistic is $360,000 per month, what are the monthly minimum and maximum ending cash balances that the firm can expect for each month?

c. Discuss how the financial manager can use the data in parts (a) and (b).

Reference no: EM131316930

Questions Cloud

Describes proper compliance with treatment programs : Discusses how society views diabetes (what society thinks it is versus what it actually is),Identifies preventive measures,Describes making the right decisions to live a healthy life,Describes proper compliance with treatment programs.

What is albemarle''s total inventory cost using the eoq point : What is Albemarle's total inventory cost using the EOQ point? Once the owner determines an adequate minimum cash balance, what is the next step in creating a cash budget?

What changes do you see at work in contemporary society : American attitudes toward death and dying have changed dramatically both after World War 1 and World War H. Describe the nature of these changes that followed each war. What changes do you see at work in contemporary society that may further alter..

Discuss some negative impacts of racism on minorities : The readings for today discuss some negative impacts of racism on minorities and their families. What are the challenges of responding effectively to racism in one's everyday life? Can you compare/contrast some strategies for response and what out..

Monthly minimum and maximum ending cash balances : Construct a cash budget for the next three months.- what are the monthly minimum and maximum ending cash balances that the firm can expect for each month?

Identify changes in krogers financial condition : Compare the sustainable growth rate to it sactual growth rate each year and, if different, identify changes in Kroger's financial condition each year that explain the differences in growth rates.

Estimate the sustainable growth rate : Construct a pro forma income statement and balance sheet for the next year for Novell Inc. - Estimate the sustainable growth rate using the latest fiscal year-end data.

How many dollars of resources does aztec have invested : How many dollars of resources does Aztec have invested in (1) inventory, (2) accounts receivable, (3) accounts payable, and (4) the total CCC?

Calculate the firms eoq for the item of inventory described : Calculate the firm's EOQ for the item of inventory described above.- What is the firm's total cost based upon the EOQ calculated in part (a)?

User Account

All Pages