Solved: 1 Use the numbers given to complete the cash

budget

1. Use the numbers given to complete the cash budget and short-term financial plan.

2. Rework the cash budget and short-term financial plan assuming Piepkorn changes to a
minimum balance of $100,000.

3. You have looked at the credit policy offered by your competitors and have determined that
the industry standard credit policy is 1/10, net 40.* The discount will begin to be offered on the
first day of the first quarter. You want to examine how this credit policy would affect the cash
budget and short-term financial plan. If this credit policy is implemented, you believe that 40
percent of all sales will take advantage of it, and the accounts receivable period will decline to
36 days. Rework the cash budget and short-term financial plan under the new credit policy and
a minimum cash balance of $100,000. What interest rate are you effectively offering customers?

4. You have talked to the company's suppliers about the credit terms Piepkorn receives.
Currently, the company receives terms of net 45. The suppliers have stated that they would
offer new credit terms of 1.5/15, net 40. The discount would begin to be offered on the first day
of the first quarter. What interest rate are the suppliers offering the company? Rework the cash
budget and short-term financial plan assuming you take the credit terms on all orders and the
minimum cash balance is $100,000. Also assume that Piepkorn offers the credit terms in the
previous question.

1 Use the numbers given to complete the cash budget

ANSWER
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