Problem 19-12 Short-Term Financing Plan (LO3)

Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table.

	Quarter in Coming Year					Following Year
	First	Second	Third	Fourth		First Quarter
Sales forecast	$484	$343	$354	$402		$402

Paymores labor and administrative expenses are $83 per quarter and interest on long-term debt is $58 per quarter. Paymores cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $44. Assume that Paymore can borrow up to $354 from a line of credit at an interest rate of 2% per quarter. 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 $354. 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. Prepare a short-term financing plan using the above table. (Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places.)