Cash budget—Sensitivity analysis Trotter Enterprises, Inc., has gathered the following data in order to plan for its cash requirements and short term investment opportunities for October, November, and December. All amounts are shown in thousands of dollars.
|
October |
November |
December |
||||||
|
Pessi |
Most |
Opti |
Pessi |
Most |
Opti |
Pessi |
Most |
Opti |
|
mistic |
likely |
mistic |
mistic |
likely |
mistic |
mistic |
likely |
mistic |
Total cash |
|
|
|
|
|
|
|
|
|
receipts |
$260 |
$342 |
$462 |
$200 |
$287 |
$366 |
$191 |
$294 |
$353 |
Total cash |
|
|
|
|
|
|
|
|
|
disbursements |
285 |
326 |
421 |
203 |
261 |
313 |
287 |
332 |
315 |
a. Prepare a sensitivity analysis of Trotter’s cash budget using $20,000 as the beginning cash balance for October and a minimum required cash balance of $18,000.
b. Use the analysis prepared in part a to predict Trotter’s financing needs and investment opportunities over the months of October, November, and December. Discuss how knowledge of the timing and amounts involved can aid the planning process.