d076 Unit 5 with verified solutions

What is the name for a forecast of short-term events that helps a company understand if it has sufficient cash? - Cash budget What is the purpose of a monthly cash budget? - To control cash inflows and outflows so you can balance income with expenditures and savings In which situation would a firm need to borrow cash? - When the beginning cash balance plus the net cash is less than the minimum cash balance required for the month How can you use the envelope method of budgeting to monitor cash flows? - Put the amount of money budgeted for each category of your expenses into labeled envelopes and then spend the money in each envelope on expenses in that category. How should you go about making changes to your budget? - Prioritize the changes you want to make and then implement them gradually one by one to make sure they work. You are a financial manager of a company. The marketing department has informed you that the projected sales growth for the upcoming year is 15%. As you conduct financial forecasting, you increase cash, accounts receivable, and inventory accounts by 15%—the same as the projected sales growth. What type of accounts are these? - Spontaneous accounts What does it mean when a firm's calculated discretionary financing needed (DFN) is negative? - The firm will have enough financing to fund projected sales. Which account is a spontaneous account? - Accounts payable Why is the sustainable growth rate (SGR) useful? - It gives the maximum growth rate that allows a firm to maintain its current financial ratios without issuing new equity.