07 Jun Question Picoso Foods has a 45-day
Question
Picoso Foods has a 45-day average collection period and an average payables period of 30 days. The
2015 sales forecast is given below, and Q1 sales for 2016 are forecasted to be $50M. The company’s
purchases are equal to 60% of next quarter’s sales. Picoso wishes to maintain a $5 million minimum
cash balance. (Other cash disbursements include wages, rent, utilities, etc.). Assume there are 90 days
in each quarter, and a starting cash balance of $6 million. Use this information to complete the
following quarterly cash budget.
Q1
Beginning receivables
Sales
Q2
Q3
Q4
25
30
40
2
2
2
5
5
5
5
20
Cash collections
Ending receivables
Beginning payables
4
Purchases
Payments to suppliers
Ending payables
Other cash disbursements
2
Total cash disbursements
Beginning cash balance
6
Net cash inflow
Ending cash balance
Minimum cash balance
5
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