Answer the follow questions

1. Explain the percent of sales method to forecast financing requirements. Provide the three steps involved in predicting those financing needs.

2. What does the cash budget represent and what four elements comprise the cash budget?

3. What is spontaneous financing? Provide an example.

4. Define and contrast the terms working capital and net working capital

5. What advantages and disadvantages are generally associated with the use of short-term debt? Discuss.

6. Explain what is meant by the statement “The use of current liabilities as opposed to long-term debt subjects the firm to a greater risk of illiquidity.”