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Unformatted text preview: 6,000 6,000 6,000 Cumulative surplus cash or total loans to maintain $6,000 target cash balance ($ 4,400 ) ($11,200 ) $ 2,000 b. If the company began selling on credit on December 1, then it would have zero receipts during December, down from $160,000. Thus, it would have to borrow an additional $160,000, so its loans outstanding by December 31 would be $164,400. The loan requirements would build gradually during the month. We could trace the effects of the changed credit policy on out into January and February, but here it would probably be best to simply construct a new cash budget....
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
- Spring '08