The Gruber company has projected the following quarterly sales amounts for the coming year: Sales ($...

 

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The Gruber company has projected the following quarterly sales amounts for the coming year: Sales ($ in millions) First Quarter $100 Second Quarter Third Quarter Fourth Quarter $200 $150 $100 All of Gruber s' cash inflows come from sales. Accounts receivable at the beginning of the year are $100. The company has a 90-day collection period and 100 percent of sales are collected the following quarter. We assume that sales in the fourth quarter of the previous fiscal year were $100 million. The sales in the first quarter of the next fiscal year will be $100 million. Purchases = 40% next quarter's sales. Beginning payables = 23. Payables period is 45 days (half of the purchases will be paid for each quarter). Wages, taxes, and other expenses as following: Q1: 20, Q2: 40, Q3: 30, Q4: 20, The company plans a major capital expenditure of $100 in the fourth quarter. Interest and dividends are $10. The initial cash balance is $40, and Gruber had established a minimum operating cash balance equal to $30 million to facilitate transactions, protect against unexpected contingencies. a. Calculate cash collections in each of the four quarters. b. Calculate payments to suppliers in each of the four quarters. c. Calculate a cash balance for Gruber company. The Gruber company has projected the following quarterly sales amounts for the coming year: Sales ($ in millions) First Quarter $100 Second Quarter Third Quarter Fourth Quarter $200 $150 $100 All of Gruber s' cash inflows come from sales. Accounts receivable at the beginning of the year are $100. The company has a 90-day collection period and 100 percent of sales are collected the following quarter. We assume that sales in the fourth quarter of the previous fiscal year were $100 million. The sales in the first quarter of the next fiscal year will be $100 million. Purchases = 40% next quarter's sales. Beginning payables = 23. Payables period is 45 days (half of the purchases will be paid for each quarter). Wages, taxes, and other expenses as following: Q1: 20, Q2: 40, Q3: 30, Q4: 20, The company plans a major capital expenditure of $100 in the fourth quarter. Interest and dividends are $10. The initial cash balance is $40, and Gruber had established a minimum operating cash balance equal to $30 million to facilitate transactions, protect against unexpected contingencies. a. Calculate cash collections in each of the four quarters. b. Calculate payments to suppliers in each of the four quarters. c. Calculate a cash balance for Gruber company.

Answer rating: 100% (QA)

ANSWERS TO QUESTIONS A AS the sales made in the current quarter will be collected in the next quarte... View the full answer