Caveney Corporation, a Melbourne, Australia, firm, is preparing a cash budget for 1999 using the following data: 

(a) Each month, 60 percent of sales is on credit. Of credit sales, 70 percent is collected in the month of sales and 30 percent in the next month. 

(b) Cost of goods sold is 70 percent of sales. Of purchases, 60 percent is paid when purchased; and the remainder is paid in the next month.

(c) Planned inventory is 40 percent of the next month's sales. Budgeted purchases in February were A$60,000. 

(d) Operating expenses are A$30,000 per month, including A$2,000 of depreciation expense. These are paid when incurred. 

(e) Forecast cash balance as of March 1 is A$20,000, which is the target level. Budgeted sales, in Australian dollars, for a portion of 1999 are: February, A$90,000; March, A$120,000; April, A$110,000; and May, A$100,000. 

Required: 

1. Create a cash forecast for March. 

2. If Caveney plans to buy a computer system for A$20,000, can the firm pay for it and keep a "safe" cash level? What are the main risks?