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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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.
Quarter in Coming Year
Third
Following
Year
Fourth First Quarter
First Second
$460
$334
Sales forecast
$351
$399
$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
40
Minimum operating cash balance
30
30
30
30
Cumulative financing required
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