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Exercise_4 - planned to be invested in July for $200,000...

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Cash budget 40% of sales are cash sales. For the credit sales, 75% is expected to be collected next month and another 25% is expected to be collected next two months. The inventory purchase is 50% of next month sales. The payment of purchase will be made 60% in next month and 40% in next two months Wages expense is 20% of sales. Lease payment is $10,000 per month. Interest payment is $30,000 and will be paid in June and September. Cash dividend is paid in June for $50,000. Tax payment is $25,000 at the end of each quarter. Capital outlay is
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Unformatted text preview: planned to be invested in July for $200,000. Minimum cash balance is $15,000 and maximum cash balance is $40,000. The borrowing rate is 8% and investing rate is 6% The ending cash balance in May is $20,000 • Use the above information to develop the cash budget for June - September • Compute the minimum required credit line • Use the scenario analysis to show the required credit line if the company can choose for capital outlay in any month between June to September...
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