Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. Paymore's cash payments to its suppliers are under the assumption that the firm pays for its goods with a 1-month delay. Therefore, on average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter.

Paymore's customers pay their bills with a 2-month delay. Therefore, on average, one-third of sales are collected in the quarter that the sales were made, and two-thirds are collected in the following quarter.

Assuming that the sales in the last quarter of the previous year were $336, labor and administrative expenses are $65 per quarter, and interest on long-term debt is $40 per quarter, work out the net cash inflow for Paymore for the coming year?

The sales forecasts for the next five quarters are as follows:

Transcribed Image Text:

Quarter in Coming Year Following Year Fourth First Quarter S384.00 Third First S372.00 S360.00 S 336.00 S 384.00 Second Sales forecast Order size 75% of sales forecast in 2/3 1/3 1/3 2/3 the next er n current er Pa Collection in current Collection in next Sales in last Labor and administrative e Interest on long-term debt n next er er er S 336.00 S 65.00 S 40.00 per quarter er er