Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the table below. First Second $460 $334 Quarter in Coming Year Third Following Year Fourth First Quarter $399 Sales forecast $351 $399 Paymore's labor and administrative expenses are $80 per quarter and interest on long-term debt is $55 per quarter. Suppose that Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. 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 $351. Also, one third of the orders are paid for in the current month and then two thirds of the next quarter's orders are paid in advance. Work out the short-term financing requirements for the firm in the coming year using the above table. The firm pays no dividends. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Negative amounts should be indicated by a minus sign.) Quarter First Second Third Fourth Sources of cash Cash at start of period 40 Net cash inflow Cash at end of period Minimum operating cash balance 40 30 30 30 30 Cumulative financing required %24
Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the table below. First Second $460 $334 Quarter in Coming Year Third Following Year Fourth First Quarter $399 Sales forecast $351 $399 Paymore's labor and administrative expenses are $80 per quarter and interest on long-term debt is $55 per quarter. Suppose that Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. 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 $351. Also, one third of the orders are paid for in the current month and then two thirds of the next quarter's orders are paid in advance. Work out the short-term financing requirements for the firm in the coming year using the above table. The firm pays no dividends. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Negative amounts should be indicated by a minus sign.) Quarter First Second Third Fourth Sources of cash Cash at start of period 40 Net cash inflow Cash at end of period Minimum operating cash balance 40 30 30 30 30 Cumulative financing required %24
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
Related questions
Question
Hello, I could really use some help with this. I am struggling. Thank you
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT