Use the information provided to calculate the amount of short$-$term financing

needed for each quarter of the next year.

$$ Sales estimates $($in millions$)$

Q$1=400$; Q$2=500$; Q$3=600$; Q$4=800$; Q$1$ next year $=500$

$$ Accounts receivable

Beginning receivables $=$ $$300$; Average collection period $=45$ days

$$ Accounts payable

Purchases $=50\%$ of next quarter$$s sales

Beginning payables $=125$; Accounts payable period is $30$ days

$$ Other expenses

$$ Wages, taxes and other expense are $25\%$ of sales

Interest and dividend payments are $$40$

There is a capital spending of $$200$ in the second quarter.

The initial cash balance is $$80$ and the company maintains a minimum balance of $$50$ for

feeling comfortable

Answer rating: 100% (QA)

To calculate the amount of shortterm financing needed for each quarter of the next year we need to c... View the full answer