Question 2: Cash Inflows from sales Budgeted sales are Month Sales revenue August $15,000 September $10,000 October $19.000 November $20,000 December $16,000 You collect 50% of sales revenue as cash in the month of the sale, 10% in the following month, and 20% two months after the sale a) Compute budgeted cash inflows for October and November October November Remember to go backwards in time: 30% of September revenue is collected in the following month (October). This implies that cash flow for October include 30of sales from the previous month (September b) According to the income statement, a firm is profitable in the current year. Can the firm run out of cash during the year? YES NO What are some examples of how a firm could run out of cash? (select all that apply Purchase of new equipment animus major new equipment for cash, then it has a large cash outlow in the current year. Current year's income statement does not reflect this couthow inted, this cash outflow will become a depreciation expens in future income statements during the entire of the equipment e Trick Getint definition, profitable form must have gher cash inflows than cash outflows El Rapid growth Aminous many cash outhows in advance to generate (e sales pens toppliers and collect chinows from sales with a delay due to create To generate higher sales, the term needs to increase cash outflows today, but the corresponding cash we will increase with a demons. The firm can run out of during this Oy c) A firm is about to run out of cash. What can it do to mitigate the cash shortage? (select all that apply) postpone payments to suppliers buy new equipment encourage customers to pay their bills early (e... offer a discount for early payment) repay bank loans early to reduce debt I encourage customers to pay in cash (eg, offer a discount for cash payment) . postpone equipment purchases borrow money