case 66 Sorenson stove company

from the book Financial Managament Applications: Cases

ay basis? Wour w ay 7. You are aware that Dan is concerned about the efficient utilization of his firm's cash resources. Specifically, he has questioned whether or not seasonal variations should be incorporated into the target balance. That would mean that during months when cash needs are greatest, the target balance would be somewhat higher, while the target would be set at a lower level during slack months. Would you recommend that Sorenson follow this strategy? If the firm had compensating balance requirements, would this affect your answer? How would a variable target balance be incorporated into the monthly cash budget? How would it be incorporated into the daily cash budget