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# Quarterly Cash Budget

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Given the new details below to do the following:
· Construct a quarterly cash budget for Lawrence
· Tell me what is the largest amount of bank debt needed and when is it needed
· Circle them in the on the borrowing line of the matrix
· What is the largest amount of surplus cash flow generated by Lawrence and when does it happen?
· Should Lawrence change their credit terms

Everything in the initial case remains the same with the exception of the credit policy which has been changed and the effects on receivable collection are as follows.

The company wants to institute a new credit policy that is 5/10 net 30. It is believed that the revised pattern for Cash received on credit sales will amount to 50 percent in the current month of sales, 50 percent in the month following the sales.

Revised Case

Quarter 1 Quarter 2 Quarter 3 Quarter 4
Inflows Work space
Cash sales
Month 1
Month 2
Month 3
Total Quarterly Cash Sales
Receivables
Collections Month 1
Collections Month 2
Collections Month 3
Total Quarterly Collections
Outflows Work space
Raw Materials
Month 1
Month 2
Month 3
Quarterly Raw materials Costs
Operating Expenses
Month 1
Month 2
Month 3
Quarterly Operating Expenses
Calculation Space

Cash Inflows
Total Quarterly Cash Sales
Total Quarterly Collections
Total Quarterly cash Inflows
Cash Outflows
Total Quarterly Raw Materials
Total Quarterly Operating Expenses
Total Quarterly Cash Outflows

Pretax Quarterly Cash Flows
Quarterly estimated Taxes
Net Quarterly Cash Flows

Beginning Cash Position 50,000
Net Quarterly Cash flows
Closing Quarterly Cash Position

Required Minimum Cash Position 20,000 20,000 20,000 20,000

Required Borrowings For the Quarter

Previous Borrowings Repaid

Final Quarterly Cash balance

#### Solution Preview

· Construct a quarterly cash budget for Lawrence

This is given above

· Tell me what is the largest amount of ...

#### Solution Summary

The solution explains how to prepare a quarterly cash budget

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