16.2 Cash Balance for Masson Corporation. The Masson Corporation has a 60-day average collection period and wishes to maintain a $5 million minimum cash balance. Based on this and the information below, complete the following cash budget. What conclusions do you draw?

Mason Corporation Cash Budget (In millions)


Mason Corporation Cash Budget (In millions)
  Q1 Q2 Q3 Q4
Beginning Receivables $120      
Sales 90 $ 120 $ 150 $ 120
Cash Collections        
Ending Receivables        
Total Cash Collections        
Total Cash Disbursements 80 160 180 160
Net Cash Inflow        
Begining Cash Blance $ 5      
Net Cash Inflow

Ending Cash Balance        
Minimum Cash Balance        
Cumulative Surplus (deficit)        




After you have reviewed Chapter 16, go to the Chapter Review and Self-Test Problem  16.2 at the end of Chapter 16 – I have attached a pdf copy of the problem so all students will be starting from the same data base regardless of the textbook edition they are using. This problem considers the short term cash position of the Masson Company.

Carefully work through the analysis of the company’s short term financial situation. You will see that the company will be in a negative cash situation three quarters from now.

As an adviser to the company you are asked to make recommendations to management on what they actions they could take to avoid the coming financial crisis.

Your paper should:

a. List the options open to the company.

b. State your recommendations

c. Explain clearly why you are making each recommendation and,

d. Present a revised cash budget showing what it the company’s cash outlook will be as a result of your recommendations.

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