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sales for the first quarter of the following year projected

Question : sales for the first quarter of the following year projected : 5615

sales for the first quarter of the following year are projected at $1600.

Accounts receivable at the beginning of the year are $600. Midwest Tire has a 60-day collection period. Calculate cash collections in each of the four quarters in the following

b). The company purchases from suppliers in a quarter are equal to 75 percet of the next quarter's forecast sales. the payables period is 60 days. Wage, taxes, and other expenses are 12% of sales, and interest and dividends are $80 per quarter. No capital expenditures are planned. Calculate the company's cash outflows.

c). The company also maintains a minimum cash balance of $800. The ending cash balance is $800 this year. Suppose the company can make short-term investment and obtain a quarterly return of 1% and can borrow short-term loan ar 2% quarterly. In the end of this year, there is no balance on either the short-term investment or borrowing account. Also assume that the interest income or cost does not add to the value of the principle. Construct a short term financial plan taking into account the opportunities to borrow and invest on a quarterly basis.

 

Q1

Q2

Q3

Q4

Sales

1500

1400

1700

1550

Building a Cash Budget Cash Collections A.R. beginning- Cash collections from prior period credit sales Cash collections from current period credit sales Total cash collections A.R. Ending Cash Disbursements Payment for purchases from prior period Payment for purchases from current period Total Payments for purchases Wages, taxes, and other expenses LT Financing nterest and Dividends) Total cash disbursements opearting Cash Flow: Cash inflow Cash outflow Net Cash Flow 600 Q2 Q3 94

 

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