Construct and use a cash budget
Response to the following problem:
Carron Communications, Inc., is preparing its cash budget for 2015. Carron ended 2014 with cash of $72 million, and managers need to keep a cash balance of at least $65 million for operations. Collections from customers are expected to total $11,233 million during 2015, and payments for the cost of services and products should reach $6,129 million. Operating expense payments are budgeted at $2,756 million. During 2015, Carron expects to invest $1,543 million in new equipment and sell older assets for $108 million. Debt payments scheduled for 2015 will total $611 million. The company forecasts net income of $884 million for 2015 and plans to pay dividends of $316 million. Prepare Carron Communications' cash budget for 2015. Will the budgeted level of cash receipts leave Carron with the desired ending cash balance of $65 million, or will the company need additional financing? If so, how much?