Pamper Company has seasonal sales during Christmas. The company, at least, holds P50,000 cash, P250,000 inventory, and P190,000 accounts receivable. During Christmas, inventory and accounts receivable increase by P400,000 and P260,000, respectively. Accounts payable is also held at a minimum P150,000; but increases to P200,000 during Christmas. The rate at which the funding requirements vary per month is linear. (Hint: to compute for the ave seasonal funding requirement, just divide by two the peal seasonal requirement) The company borrows short-term funds at 5% and long-term funds at 7.5%, then earns 6% on the investment of any surplus balance. How much is the permanent funding requirement throughout the year? How much is the seasonal funding requirement during Christmas? How much is the cost of funding if Pamper utilizes an aggressive funding strategy?
Pamper Company has seasonal sales during Christmas. The company, at least, holds P50,000 cash, P250,000 inventory, and P190,000 accounts receivable. During Christmas, inventory and accounts receivable increase by P400,000 and P260,000, respectively. Accounts payable is also held at a minimum P150,000; but increases to P200,000 during Christmas. The rate at which the funding requirements vary per month is linear. (Hint: to compute for the ave seasonal funding requirement, just divide by two the peal seasonal requirement) The company borrows short-term funds at 5% and long-term funds at 7.5%, then earns 6% on the investment of any surplus balance.
How much is the permanent funding requirement throughout the year?
How much is the seasonal funding requirement during Christmas?
How much is the cost of funding if Pamper utilizes an aggressive funding strategy?
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