Managerial Accounting: Analysis of Envelope Budgeting and Cash Flow

This document presents a comprehensive analysis of envelope budgeting and cash flow management, focusing on a case study involving Henry Company. The assignment begins by summarizing the process of envelope budgeting, outlining its core elements and providing a concise overview of its advantages and disadvantages. The core of the assignment involves preparing a cash budget for Henry Company, analyzing its inflows, outflows, and financing needs for January and February, and subsequently extending the analysis to include March. The analysis explores scenarios with and without the sale of marketable securities, determining the impact on the company's cash balance and the need for borrowing. The solution provides detailed calculations and insights into the company's cash position, including the maximum borrowing capacity and the implications of the cash conversion cycle. The assignment highlights the importance of maintaining a minimum cash balance and offers a thorough understanding of financial planning and cash management techniques.