Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 29, Problem 5PS
Summary Introduction
To determine: The impact of changes on firm’s cash cycle.
Cash cycle is the overall circulation or cycle of cash commences from the payment of raw materials and ends with receipt of cash on goods sold.
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Here is a forecast of sales by National Bromide for the first four months of 2022 (figures in $ thousands):
Month 1 Month 2 Month 3 Month 4 Cash sales 35 44 38 34 Sales on credit 300 320 290 270 On average,
45% of credit sales are paid for in the current month, 25% are paid in the next month, and the remainder
are paid in the month after that. What is the expected cash inflow from operations in months 3 and 4?
Note: Do not round intermediate calculations. Enter your answers in thousands and rounded to one
decimal place.
Here is a forecast of sales by National Bromide for the first four months of 2022 (figures in $ thousands).
Month 1 Month 2
25
34
200
220
Month 3
28
Month 4
24
190
170
Cash sales
Sales on credit
On average, 45% of credit sales are paid for in the current month, 25% are paid in the next month, and the remainder are paid in the
month after that. What is the expected cash inflow from operations in months 3 and 4?
Note: Do not round intermediate calculations. Enter your answers in whole dollars and not in thousands rounded to the nearest
whole number.
Answer is complete but not entirely correct.
Expected Cash Inflow from
Operations (in S
thousands)
Items
Month 3
Month 4
$
391
360
Here is a forecast of sales by National Bromide for the first four months of 2022 (figures in $ thousands):
Month 1
Month 2
Cash sales
Sales on credit
16
110
25
130
Month 3 Month 4
19
100
15
80
On average, 51% of credit sales are paid for in the current month, 31% are paid in the next month, and the remainder are paid in the
month after that. What is the expected cash inflow from operations in months 3 and 4?
Note: Do not round intermediate calculations. Enter your answers in thousands and rounded to one decimal place.
Items
Month 3
Month 4
Expected Cash Inflow from
Operations (in $ thousands)
Chapter 29 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 29 - Prob. 1PSCh. 29 - Prob. 2PSCh. 29 - Sources and uses of cash and working capital...Ch. 29 - Sources and uses of cash State whether each of the...Ch. 29 - Prob. 5PSCh. 29 - Forecasts of payables Dynamic Futon forecasts the...Ch. 29 - Prob. 8PSCh. 29 - Prob. 9PSCh. 29 - Prob. 10PSCh. 29 - Prob. 11PS
Ch. 29 - Cash cycle A firm is considering several policy...Ch. 29 - Prob. 13PSCh. 29 - Collections on receivables If a firm pays its...Ch. 29 - Short-term financial plans Which items in Table...Ch. 29 - Prob. 16PSCh. 29 - Short-term financial plans Work out a short-term...Ch. 29 - Prob. 18PSCh. 29 - Prob. 19PSCh. 29 - Long-term financial plans Corporate financial...Ch. 29 - Prob. 21PSCh. 29 - Long-term financial plans a. Use the Dynamic...Ch. 29 - Long-term plans The financial statements of Eagle...Ch. 29 - Forecast growth rate a. What is the internal...Ch. 29 - Forecast growth rate Bio-Plasma Corp. is growing...Ch. 29 - Long-term plans Table 29.19 shows the 2016...
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- Fitbands estimated sales are: What are the balances in accounts receivable for January, February, and March if 65% of sales is collected in the month of sale, 25% is collected the month after the sale, and 10% is second month after the sale?arrow_forwardCash collections for Renew Lights found that 65% of sales were collected in the month of sale, 25% was collected the month after the sale, and 10% was collected the second month after the sale. Given the sales shown, how much cash will be collected in March and April?arrow_forwardHere is a forecast of sales by National Bromide for the first four months of 2019 (figures in $ thousands): Month 1 Month 2 Month 3 Month 4 Cash sales 17 26 20 16 Sales on credit 120 140 110 90 On the average 52% of credit sales are paid for in the current month, 32% are paid in the next month, and the remainder are paid in the month after that. What is the expected cash inflow from operations in months 3 and 4? (Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number.)arrow_forward
- Here is a forecast of sales by National Bromide for the first four months of 2022 (figures in $ thousands) Month 1 Month 2 Month 3 Month 4 Cash sales Sales on credit 23 180 32 200 26 170 22 150 On average, 47% of credit sales are paid for in the current month, 27% are paid in the next month, and the remainder are paid in the month after that. What is the expected cash inflow from operations in months 3 and 4? Note: Do not round intermediate calculations. Enter your answers in thousands and rounded to one decimal place. Items Month 3 Month 4 Expected Cash Inflow from Operations (in $ thousands) Helparrow_forwardHere is a forecast of sales by National Bromide for the first 4 months of 2019 (figures in thousands of dollars): Month: 1 21 3\ 4 Cash sales 32 41 35 31 Sales on credit 185 205 175 155 On average, 60% of credit sales are paid for in the current month, 20% in the next month, and the remainder in the month after that. What are the expected cash collections in months 3 and 4? (Enter your answers in whole dollars not in thousands of dollars.) Expected Cash Collections Month 3 Month 4 < Prev 3 of 8 Next searcharrow_forwardHere is a forecast of sales by National Bromide for the first 4 months of 2019 (figures in thousands of dollars): Month: 1 2 3 4 Cash sales 24 33 27 23 Sales on credit 145 165 135 115 On average, 60% of credit sales are paid for in the current month, 20% in the next month, and the remainder in the month after that. What are the expected cash collections in months 3 and 4? (Enter your answers in whole dollars not in thousands of dollars.)arrow_forward
- Here is a forecast of sales by National Bromide for the first 4 months of 2019 (figures in thousands of dollars): Month: 1 2 3 4 Cash sales 30 39 33 29 Sales on credit 175 195 165 145 On average, 60% of credit sales are paid for in the current month, 20% in the next month, and the remainder in the month after that. What are the expected cash collections in months 3 and 4? (Enter your answers in whole dollars not in thousands of dollars.) Expected Cash collections Months 3 ______________ Months 4 ______________arrow_forwardSuppose that the Sales in December 2019 were 26,630. The sales are expected to grow by 7% in January 2020, by 5% in February 2020, and by 5% in March 2020. After that, the sales are expected to grow by 11%. The company's cash collection is as follows: 71% is collected in the same month and the remainder in the next month. What is the cash collection for July, 2020?arrow_forwardAssume that your credit sales for March was $16,288,for April was $33,301 and May was $29,261. If credit sales are collected 55% during the month of sale, 25% the month following the sale, and 15% in the second month following the sale, what is the total expected cash collections to be received in May? Round your answer to one dollar.arrow_forward
- Suppose that the Sales in December 2019 were 78,893. The sales are expected to grow by 15% in January 2020, by 4% in February 2020, and by 5% in March 2020. After that, the sales are expected to grow by 4%. The company's cash collection is as follows: 22% is collected in the same month, 22% is collected in the next month, and the remainder in the following month. What is the cash collection for June, 2020?arrow_forwardSuppose that the Sales in December 2019 were 86,536. The sales are expected to grow by 9% in January 2020, by 14% in February 2020, and by 15% in March 2020. After that, the sales are expected to grow by 10%. The company's cash collection is as follows: 60% is collected in the same month and the remainder in the next month. What is the cash collection for June, 2020?arrow_forwardAssume receivables of $20,000 at the start of the January are all collected during the month; if sales for January and February are $400,000 and $300,000 respectively; the company typically receives payment from 20% of its customers within the same month, 60% the following month, and the remaining 20% by the end of the second following month, how much would accounts receivable be at the end of February?arrow_forward
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