Final answer:
In Royal Industries' scenario, the 'needed to borrow' or 'available for repayment' amount in January depends on whether the company's cash budget results in a surplus or deficit. If the budget shows a cash shortfall, the company borrows, if there's a surplus, it repays debts or invests the surplus.
Step-by-step explanation:
The question relates to a cash management scenario in Royal Industries where the company practices balancing its cash flows by borrowing in the case of shortfall and repaying or investing in case of a surplus. At the beginning of January, the amount needed to borrow or the amount available for repayment of debt is dependent on the company's cash budget, which indicates whether there's a deficit or surplus in the cash flow. If there is a deficit, the company will borrow the required funds; if there's a surplus, it will use the extra funds for repaying outstanding debts or making short-term investments.
Businesses like Royal Industries often require financial capital for various operations and projects that have potential future payoffs. This requirement could lead to borrowing through financial markets or using internal funds generated through profits. As per the shared context, when entities like a business or college students have confidence in their future income, they are more inclined to borrow, anticipating that they can repay these amounts in the foreseeable future, thereby increasing the demand for financial capital.