=6. This and the following two problems demonstrate that pro forma forecasts, cash budgets, and cash flow forecasts all yield the same estimated need for external financing—provided you don't make any mistakes. For problems 6, 7, and 8, you may ignore the effect of added borrowing on interest expense.

The treasurer of Pepperton, Inc., a wholesale distributor of household appliances, wants to estimate his company's cash balances for the first three months of 2006. Using the information below, construct a monthly cash budget for Pepperton for January through March 2006. Does it appear from your results that the treasurer should be concerned about investing excess cash or looking for a bank loan?