PAMANTASAN NG LUNGSOD NG MAYNILA (University of the city of Manila)

Financial Management 1 Quiz

1. In October, a firm had an ending cash balance of $35,000. In November, the firm had a net cash flow of $40,000. The minimum cash balance required by the firm is $25,000. At the end of November, the firm had a. an excess cash balance of $50,000 c. required total financing of $15,000 b. an excess cash balance of $75,000 d. required total financing of $5,000 2. In the month of August, a firm had total cash receipts of $10,000, total cash disbursements of $8,000, depreciation expense of $1,000, a minimum cash balance of $3,000, and a beginning cash balance of $500. The ending cash balance for August totals a. $1,500 c. $2,500 b. $5,500 d. $3,500 3. A firm has actual sales in November of $1,000 and projected sales in December and January of $3,000 and $4,000, respectively. The firm makes 10 percent of its sales for cash, collects 40 percent of its sales one month following the sale, and collects the balance two months following the sale. The firm's total expected cash receipts in January a. are $700 c. are $1,900 b. are $ 2,100 d. cannot be determined with the information provided

Cash Budget Gerry Jacobs, a financial analyst for Best Value Supermarkets, has prepared the following sales and cash disbursement estimates for the period August through December of the current year.

Ninety percent of sales are for cash, the remaining 10 percent are collected one month later. All disbursements are on a cash basis. The firm wishes to maintain a minimum cash balance of $50. The beginning cash balance in September is $25. Prepare a cash budget for the months of October, November, and December, noting any needed financing or excess cash available.

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PAMANTASAN NG LUNGSOD NG MAYNILA (University of the city of Manila)

Financial Management 1 1. A Answer

Net Cash Flow Add Cash Balance Beginning Cash Balance ending Less Minimum Requirement Excess
2. C

$ $ $

40,000 35,000 75,000 25,000 50,000

Cash Receipts Less Cash Disbursement Net Cash Flow Add Cash Balance Beginning Cash Balance Ending
3. B

$ $ $

10,000 8,000 2,000 500 2,500

Cash Sales - January (4,000 x 10%) Collection of AR November sales (1,000 x 50%) $ December Sales (3,000 x 40%) Total Cash Receipts - January

$ 500 1,200 , $

400

1,700 2,100

CASH BUDGET
Sales Cash Sales (90%) On Account (10%) Collection of AR Total Cash Receipt $ $ $ Aug 400 $ 360 $ 40 * $ $ Sep 500 450 50 40 490 $ $ $ $ Oct 500 450 50 50 500 $ $ $ $ Nov 600 540 60 50 590 $ $ $ $ Dec 700 630 70 60 690

* No information for July Sales on Account.

Best Value Supermarkets Cash Budget For the Month of October - December Sep Cash Balance, Beginning Add Cash Receipts Total Cash Available Less Cash Disbursement Cash Balance, Ending Less Minimum Cash Balance Required Financing Excess Cash $ $ $ $ 25 490 515 500 15 50 (35) $ $ $ $ Oct 15 500 515 700 (185) 50 (235) $ $ $ $ Nov (185) $ 590 405 $ 400 5 $ 50 (45) $ Dec 5 690 695 500 195 50 145

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