WILDCAT, INCORPORATED Short-Term Financial Plan (in millions) Target cash balance Net cash inflow New short-term investments Interest from short-term investments Short-term investments sold New short-term borrowing Q1 Q2 Q3 $ 20.00 $ 20.00 $ 20.00 $ Q4 20.00 1.57 0 0 0 0 0 0 Interest on short-term borrowing 0 0 0 Short-term borrowing repaid 0 0 0 Ending cash balance 20.00 $ 20.00 20.00 $ 20.00 Minimum cash balance -20.00 -20.00 -20.00 Cumulative surplus (deficit) 0 $ 0 $ 0 $ -20.00 0 Beginning short-term investments Ending short-term investments Beginning short-term debt Ending short-term debt Target cash balance Net cash inflow New short-term investments Income from short-term investments Short-term investments sold New short-term borrowing Interest on short-term borrowing Short-term borrowing repaid Ending cash balance Minimum cash balance Cumulative surplus (deficit) Beginning short-term investments Ending short-term investments Beginning short-term debt Ending short-term debt WILDCAT, INCORPORATED Short-Term Financial Plan (in millions) Q1 Q2 Q3 Q4 $ 40.00 $ 40.00 $ 40.00 $ 40.00
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Wildcat, Incorporated, has estimated sales (in millions) for the next four quarters as follows: |
| Q1 | Q2 | Q3 | Q4 | |
|---|---|---|---|---|
| Sales | $ 180 | $ 200 | $ 220 | $ 250 |
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Sales for the first quarter of the year after this one are projected at $195 million. Accounts receivable at the beginning of the year were $77 million. Wildcat has a 45-day collection period. |
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Wildcat’s purchases from suppliers in a quarter are equal to 50 percent of the next quarter’s |
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Wildcat plans a major capital outlay in the second quarter of $85 million. Finally, the company started the year with a cash balance of $81 million and wishes to maintain a minimum balance of $40 million. |
| a-1. |
Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 3 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 2 percent per quarter. Complete the following short-term financial plan for Wildcat. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in millions rounded to 2 decimal places, e.g., 32.16. Leave no cells blank - be certain to enter "0" wherever required.) |
| a-2. |
What is the net cash cost (total interest paid minus total investment income earned) for the year under this target cash balance? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in millions rounded to 2 decimal places, e.g., 32.16. Leave no cells blank - be certain to enter "0" wherever required.) |
| b-1. |
Complete the following short-term financial plan assuming that Wildcat maintains a minimum cash balance of $20 million. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in millions rounded to 2 decimal places, e.g., 32.16. Leave no cells blank - be certain to enter "0" wherever required.) |
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