Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 3 Digital Solutions Inc is preparing its cash collection summary for 2018. Digital ended 2017 with cash of $81 million, and managers need to

Question 3

Digital Solutions Inc is preparing its cash collection summary for 2018. Digital ended 2017 with cash of $81 million, and managers need to keep a cash balance of at least $75 million for operations.

Account Receivables are expected to total $11,284 million during 2018, and payments for the cost of services should reach $6,166 million. Estimate bad debt expense will be at $2,543 million.

During 2018, Digital expects to invest $1,825 million in new equipment and sell older assets for $115 million. Debt payments scheduled for 2018 will total $597 million. The company forecasts net income of $890 million for 2018 and plans to pay dividends of $338 million.

Prepare Digital Solutions cash balance for 2018. Will the cash receipts and payments leave Digital with the desired ending cash balance of $75 million, or will the company need additional financing? If it does, how much will it need?

Hint: cash collections - cash payments = ending cash - desired balance = financing (if needed)

Please give details as per this statement

Will the cash receipts and payments leave Digital with the desired ending cash balance of $75 million, or will the company need additional financing? If it does, how much will it need?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions