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 74% 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 $1,074 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 $15 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 first quarter (Q1)
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 $37 million and it expects to maintain a minimum target cash balance of at least $15 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: The income statement and the cash budget are exactly the same. The only difference is that the income statement is prepared semiannually, whereas the cash budget is prepared daily or monthly.

True

False