ORGA-330 Lecture Notes - Lecture 6: Income Statement
25 Mar 2016
School
Department
Course
Professor
Document Summary
Cash budget indicates the company is going to incur net cash loss in the irst three months but to have net cash gain in the later three months. To maintain a monthly target cash balance of million, Microdrive will have to borrow in the irst three months, and the total loan requirement is expected to peak at the end of. As sales increase steadily in the irst few months and peak in. September, increased payments for purchases, wages, and other items will exceed receipts from sales, leading to net cash ouflow in the irst few months. In the later 3 months, sales, purchases, and payments for past purchases will fall sharply, while collecions will increase following strong sales in the previous months, resuling in net cash gain. The cash surplus can be used to pay of the loans taken out in the irst few months.
