A Company Is Preparing Its Cash Budget

question 65

Multiple Choice

A company is preparing its cash budget. Its cash balance on January 1 is $290,000, and it has a minimum cash requirement of $340,000. The following data have been provided: ​
-Southern Company is preparing a cash budget for April. The company has $12,000 cash at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during April. Southern Company has an agreement with its bank to maintain a minimum cash balance of $10,000. To maintain the required balance during April, the company must

• A)borrow $4,500
• B)borrow $2,500
• C)borrow $7,500
• D)borrow $5,000

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Definitions:

Planning Phase

The initial stage in a project or strategy where objectives are defined and approaches are determined.

Diversification Analysis

The process of identifying and implementing new business opportunities outside a company's current products, services, or markets to reduce risk.

Marketing Plan

A detailed strategy for identifying target markets and how to reach them, outlining marketing objectives, tactics, and measures of success.

Harley-Davidson

A motorcycle company in the United States famed for producing heavy bikes intended for long-distance riding on highways.