Paymore Products places orders for goods equal to 75% of its sales forecast in the next...
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Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the table below. Sales forecast Quarter in Coming Year First $492 Second $346 Third $355 Fourth $403 Following Year First Quarter $403 Paymore's labor and administrative expenses are $84 per quarter and interest on long-term debt is $59 per quarter. Suppose that Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $355. Also, one third of the orders are paid for in the current month and then two thirds of the next quarter's orders are paid in advance. Work out the short-term financing requirements for the firm in the coming year using the above table. The firm pays no dividends. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Negative amounts should be indicated by a minus sign.) Answer is complete but not entirely correct. Quarter First Second Third Fourth Sources of cash Cash at start of period $ 40 $ 2 $ 38 $ (46) Net cash inflow (38) 36 (84) (74) Cash at end of period 2 38 (46) (120) Minimum operating cash balance 30 30 30 30 Cumulative financing required $ 28 $ 0 $ 76 $ 196 Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the table below. Sales forecast Quarter in Coming Year First $492 Second $346 Third $355 Fourth $403 Following Year First Quarter $403 Paymore's labor and administrative expenses are $84 per quarter and interest on long-term debt is $59 per quarter. Suppose that Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $355. Also, one third of the orders are paid for in the current month and then two thirds of the next quarter's orders are paid in advance. Work out the short-term financing requirements for the firm in the coming year using the above table. The firm pays no dividends. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Negative amounts should be indicated by a minus sign.) Answer is complete but not entirely correct. Quarter First Second Third Fourth Sources of cash Cash at start of period $ 40 $ 2 $ 38 $ (46) Net cash inflow (38) 36 (84) (74) Cash at end of period 2 38 (46) (120) Minimum operating cash balance 30 30 30 30 Cumulative financing required $ 28 $ 0 $ 76 $ 196
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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