chapter 18 hw - Akbar Bhojani 105882655 1 The primary...

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Unformatted text preview: Akbar Bhojani 105882655 1) The primary reasons that companies hold cash is because managers must keep cash to make payments when needed. Cash also buys time for a company. 2) The factors that affect the size of the miniumum cash balance are (1) how quickly and cheaply a firm can raise cash when needed, meaning if it takes a firm a long time to come up with money, in an emergency this would not be a good situation, but if they could get money in very little time, they wouldn’t have to keep as much money on hand, (2) how accurately the firms managers can predict when cash payment requirements will occur, if the company doesn’t have surprise expenses “daily” then they don’t have to worry that their cash needs would fluctuate, and (3) how much precautionary cash the firms managers want to keep to safeguard against emergencies, you can’t predict a disaster. 5) The difference between a pro forma statement and a cash budget is that a pro forma statement assumes that income and expensed are paid for in cash, which is not always true. The cash budget helps us to estimate true future cash needs as a way to develop a cash budget. 18-2 A) $4623.55 B) $9470.66 18-4 $17078.25 18-6...
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This note was uploaded on 05/11/2008 for the course BUS 330 taught by Professor Nugent during the Spring '08 term at SUNY Stony Brook.

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chapter 18 hw - Akbar Bhojani 105882655 1 The primary...

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