Required:- The business needs to have a sense of its future cash inflows and outflows for the quarter and therefore requires the preparation of the following: A schedule of budgeted cash collections for trade receivables for each of the months January to March. A schedule of expected cash disbursements for accounts payable for each of the months January to March. A cash budget, with a total column, for the quarter ending March 31, 2023, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.
Required:-
The business needs to have a sense of its future
- A schedule of budgeted cash collections for trade receivables for each of the months January to March.
- A schedule of expected cash disbursements for accounts payable for each of the months January to March.
- A
cash budget , with a total column, for the quarter ending March 31, 2023, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.
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Upon receipt of the budget, the team manager, Damion Brownie, has now informed you
that, in keeping with industry players, the management of Varsity Supplies & Things have
indicated an industry requirement to maintain a minimum cash balance of $162,000 each
month. He has also noted that management is very keen on keeping the gearing ratio of the
business as low as possible and would therefore prefer to cushion any gaps internally using
equity financing.
Based on the budget prepared, will the business be achieving this desired target? Suggest three (3) internal strategies that may be employed by management to improve the organization’s monthly cash flow and militate against or reduce any possible shortfall reflected in the budget prepared. Each strategy must be fully explained