A firm has a minimum desired cash balance of $10,000.Any cash shortfalls will be made up with short-term financing.The net cash flow for January is $3,000 and the beginning balance for that month is $5,000: The cash balance for the beginning of February will be:
A)-$2,000
B)$10,000
C)$3,000
D)cannot determine from this information

Question

Quizplus · Accepted Answer

The beginning cash balance for January is $5,000, and the net cash flow for January is $3,000, resulting in an ending balance of $8,000. Since the firm desires a minimum cash balance of $10,000, it will need to borrow $2,000 to meet this requirement. Therefore, the beginning cash balance for February will be $10,000.

A Firm Has a Minimum Desired Cash Balance of $10,000