The Eliot Co

question 47

Multiple Choice

The Eliot Co.needs $185,000 a week to pay bills.The standard deviation of the weekly disbursements is $17,600.The firm has established a lower cash balance limit of $75,000.The applicable interest rate is 5.5 percent and the fixed cost of transferring funds is $47.Based on the BAT model,what is the optimal initial cash balance?

• A)$90,668
• B)$97,515
• C)$104,141
• D)$128,224
• E)$136,509

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Definitions:

Multiple-Step Income Statement

An income statement that separates operating revenues and operating expenses from non-operating revenues, non-operating expenses, gains, and losses, providing a detailed analysis of income and expenses.

Gross Profit

The difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments.

Income for Operations

The earnings generated from a company's regular, core business activities before interest and taxes.

Net Sales

The revenue generated from sales activities after deducting returns, allowances, and discounts, representing the actual income earned by a business from its core operations.