What types of conclusions can you reach when you see this kind of variability?
Imagine that those cash conversion cycles are based on this information:
What would be your analysis of the cash conversion cycles based on the above information (inventory turnover, accounts receivable turnover, and accounts payable turnover)? Use the worksheet below to summarize your conclusions.
June 1 Cash Balance $90,000
Cash Receipts $300,000
Cash Disbursement $350,000
Taking into account an amount of cash that the firm likes to maintain as a target (minimum cash balance) of $75,000, prepare the cash budget for June using the format below. Assume that, if necessary, the company will draw upon a preestablished line of credit with their bank to be able to maintain the target cash balance.
Will the company need short-term financing?
Based on past collection patterns, management expects the following:
Also, based on past experience, management forecasts that 5 percent of accounts receivable will be uncollectible and will eventually be written off.
What are the expected cash receipts for March?
What would be the expected cash receipts for March?