Cash Budget: 1)Close to 50% of the typical industrial and retail firm’s assets are held as working capital. Many newly minted college graduates work in positions that focus on working capital management, particularly in small businesses in which most new jobs are created in today’s economy. To prepare for this Discussion: Shared Practice, select two of the following components of working capital management: the cash conversion cycle, the cash budget, inventory management, and credit policies. Think about scenarios in which your selected topics were important for informing decision making. Be sure to review the video links above and conduct additional research using academically reviewed materials, and your professional experience on working capital concepts to help develop your scenarios. Support your discussion with appropriate examples including numerical examples as necessary. -300 words with three references 2) What is a multinational corporation? Why do firms expand into other countries? -150 words 3). Discuss at least six major factors which distinguish multinational financial management from financial management as practiced by a purely domestic firm. (Please consider doing additional research on this question and document your findings). -150 words 4) Discuss exchange rate risk as they relate to multinational corporations.-150 words References for all questions

The cash budget is a crucial component of working capital management in both industrial and retail firms. It provides a detailed forecast of a company’s cash inflows and outflows over a specific period of time, typically on a monthly or quarterly basis. The purpose of a cash budget is to ensure that a company has sufficient cash to meet its short-term obligations, such as paying suppliers and employees, while also providing insight into potential cash surpluses or deficits.

One scenario in which the cash budget is important for informing decision making is during a period of economic downturn or recession. In such times, businesses may experience a decrease in sales and revenue, which can have a significant impact on their cash flow. By creating a cash budget, management can accurately forecast the company’s cash inflows and outflows, allowing them to make informed decisions on cost-cutting measures or adjusting their production and inventory levels to better align with expected cash inflows.

For example, let’s consider a retail firm that sells luxury goods. During an economic downturn, consumers may reduce their spending on non-essential items, leading to a decrease in sales for the firm. By creating a cash budget, the company can identify potential cash flow gaps and take proactive measures to manage their working capital effectively. This may include negotiating longer payment terms with suppliers or reducing inventory levels to minimize the amount of capital tied up in unsold goods.

Another scenario where the cash budget is important is during periods of rapid growth for a company. When a firm experiences significant growth, it may face challenges in managing its working capital efficiently. Increased sales often require additional investments in inventory, production capacity, and marketing, which can strain the company’s cash resources.

By using a cash budget, the management can identify the cash requirements for the business’s expansion plans and ensure that sufficient cash is available to support the growth. This may involve exploring financing options such as short-term loans or lines of credit to bridge any cash flow gaps.

In summary, the cash budget is a vital tool for working capital management. It allows businesses to forecast their cash inflows and outflows, helping them make informed decisions during periods of economic downturn or rapid growth. By effectively managing their cash resources, companies can optimize their working capital and improve their overall financial position.

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