4 Cash budget Mooney Equipment is putting together its cash budget for the following year and has forecasted expected cash collections over the next five quarters (one year plus the first quarter of next year) The cash collection estimates are based on sales projections and expected collection of receivables The sales and cash collection estimates are shown in the following table (in millions of dollars) Q1 Q2 Q3 Q4 Q5 Sales $1,100 $1,400 $1,450 $1,250 $1,500 Total cash collections $1,100 $1,150 $1,200 $1,200 You also have the following information about Mooney Equipment You are at the end of the current year, and Q1 is the next period In any given period, Mooneys purchases from suppliers generally account for 72 of the expected sales in the next period , and wages, supplies, and taxes are expected to be 15 of the next periods sales In the third quarter, Mooney expects to expand one of its plants, which will require an additional $1,072 million investment Every quarter, Mooney pays $60 million in interest and dividend payments to long term debt and equity investors Mooney prefers to keep a minimum target cash balance of at least $14 million at all times Using this information, complete the following table by making necessary calculations ( Note Round intermediate calculations to the nearest whole dollar ) The net cash inflow that Mooney expects in the second quarter (Q2) Mooneys likely cash balance at the end of the year (after Q4) ( Hint Assume that at the beginning of the year, Mooneys cash balance is $36 million and it expects to maintain a minimum target cash balance of at least $14 million ) The maximum investable funds that the firm expects to have in the next year The largest cash deficit that the firm expects to suffer in the next year True or False One of the firms suppliers offers payment terms of 3 10, net 30 and the other offers net 30 If the firm chooses to go with the one that offers 3 10, net 30 and everything else remains the same, the firms net cash flow is likely to increase in a monthly cash budget after a few months TRUE FALSE

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4. Cash budget Mooney Equipment is putting together its cash budget for the following year and has forecasted expected cash collections over the next five

4. Cash budget

Mooney Equipment is putting together its cash budget for the following year and has forecasted expected cash collections over the next five quarters (one year plus the first quarter of next year). The cash collection estimates are based on sales projections and expected collection of receivables. The sales and cash collection estimates are shown in the following table (in millions of dollars):

	Q1	Q2	Q3	Q4	Q5
Sales	$1,100	$1,400	$1,450	$1,250	$1,500
Total cash collections	$1,100	$1,150	$1,200	$1,200

You also have the following information about Mooney Equipment:

	You are at the end of the current year, and Q1 is the next period.
	In any given period, Mooneys purchases from suppliers generally account for 72% of the expected sales in the next period, and wages, supplies, and taxes are expected to be 15% of the next periods sales.
	In the third quarter, Mooney expects to expand one of its plants, which will require an additional $1,072 million investment.
	Every quarter, Mooney pays $60 million in interest and dividend payments to long-term debt and equity investors.
	Mooney prefers to keep a minimum target cash balance of at least $14 million at all times.

Using this information, complete the following table by making necessary calculations. (Note: Round intermediate calculations to the nearest whole dollar.)

The net cash inflow that Mooney expects in the second quarter (Q2)?
Mooneys likely cash balance at the end of the year (after Q4). (Hint: Assume that at the beginning of the year, Mooneys cash balance is $36 million and it expects to maintain a minimum target cash balance of at least $14 million.)?
The maximum investable funds that the firm expects to have in the next year.?
The largest cash deficit that the firm expects to suffer in the next year. ?

True or False:

One of the firms suppliers offers payment terms of 3/10, net 30 and the other offers net 30. If the firm chooses to go with the one that offers 3/10, net 30 and everything else remains the same, the firms net cash flow is likely to increase in a monthly cash budget after a few months.

TRUE

FALSE