Alpine Wear, Inc. Cash Budgets and AFN

1-Could the company increase or decrease its loan on a daily basis? If not, would this have any effect on the amount of funds it needs?

2-Because cash is a non-earning asset, Alpine Wear’s cash management policy is to invest any surplus funds in marketable securities.Suggest an investment policy that will provide liquidity and safety, yet offer the firm a reasonable return on its marketable securities investment? Specifically, describe the types of securities, the desired maturities, the expected returns, and the risks that would be involved. Would your suggestions be the same for a company whose cash balances were projected to be in the millions of dollars as opposed to Alpine Wear’s thousands? Would it matter if the forecasts showed cash surpluses for all future months, going out indefinitely, versus a situation in which surpluses and deficits alternated from month to month due to seasonal factors?