a. It appears that Unilate Textiles sales are the best in September. Why is their cash flow negative? b. How does borrowing the 9.1 million dollars that they are short in July in the cash budget impact the future cash budget? c. In August, why is the target cash balance added to the negative ending cash balance to give Unilate a larger shortfall? d. What happens to Unilates short term borrowing between September and October?

WORLD 1 DEC. AUG. 200.0 150.0 SEPT. 250.0 108.0 OCT. 180.0 78.0 100.0 130.0 60.0 STAHLER120 Unilate Textiles: 2001 Cash Budget (millions of dollars) MAY JUNE JULY Credit sales 100.0 125.0 150. 0 Credit purchases = 60% of next month's sales 90.0 120.0 Casb Receipts Collections from this month's sales - 0.2 x 0.98 x (current sales) 29.4 Collections from previous month's sales 0.7 X (previous month's sales) 87.5 Collect from sales two months previously 0.1 X (sales 2 months ago) 10.0 Total cash receipts $126.9 Cash Dishuram Payments made for credit purchases (1-month lag) Wages and salaries (22% of monthly sales) Rent Other expenses 7.0 35.3 175.0 39.2 105.0 12.5 $156.7 49.0 140.0 15.0 $204.0 25.5 126.0 25.0 $176.5 19.6 91.0 18.0 $128.6 20.0 150.0 120.0 44.0 60.0 78.0 28.6 55.0 108.0 39.6 9.0 10.0 22.0 8.0 9.0 11.0 16.0 9.0 5.0 9.0 4.0 10.0 Taxes Payment for plant construction Total cash disbursements Net cash flow (Receipts - Disbursements) Beginning atsb balance Ending cash balance Target (minimum) cast balance Surplus (sbortfall) cast 20.0 $139.0 $181.0 $241.0 $186.6 $120.6 $ 12.1) ($ 24.3) ($ 37.0 S 43.7 $ 55.9 $ 8.0 ($_4.1) ($ 28.4) (S 65.4) ($ 21.7) ( 4.1) ( 28.4) (65.4) (21.7) 34.2 _5.0 5.0 5.0 5.0 5.0 ($_9.1) ($ 33.4) ($ 70.4 ($ 26.7) $29.2 $105.0 $ 23.6 $ 34.2 57.8 $ 52.8 TL 4 1TT1 _ 1 1 1_ 11. 1. 1. 1. 41 1 . A