Fallon Communications, Inc., is preparing its cash budget for 2011. Fallon ended 2010 with cash of $82 million, and managers need to keep a cash balance of at least $81 million for operations.
Collections from customers are expected to total $11,307 million during 2011, and payments for the cost of services and products should reach $6,174 million. Operating expense payments are budgeted at $2,545 million.
During 2011, Fallon expects to invest $1,831 million in new equipment and sell older assets for $121 million. Debt payments scheduled for 2011 will total $604 million. The company forecasts net income of $883 million for 2011 and plans to pay dividends of $341 million.
Prepare Fallon Communications cash budget for 2011. Will the budgeted level of cash receipts leave Fallon with the desired ending cash balance of $81 million, or will the company need additional financing? If so, how much?