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2 years ago

Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows:

Business

1 answer:

slavikrds [6]2 years ago

5 0

Answer:

Wildcat, Inc.

WILDCAT, INC. Cash Budget (in millions)

Q1 Q2 Q3 Q4

Beginning cash balance $78.00 $115.90 $48.45 $83.40

Net cash inflow 37.90 -67.45 34.95 71.05

Ending cash balance $115.90 $48.45 $83.40 $154.45

Minimum cash balance -40.00 -40.00 -40.00 -40.00

Cumulative surplus (deficit) $75.90 $8.45 $43.40 $114.45

Explanation:

a) Data and Calculations:

Q1 Q2 Q3 Q4 Q1

Sales (in millions) $165 $185 $205 $235 $180

Accounts receivable at beginning of the year = $71 million

Collection period = 45 days = 50% in each quarter and 50% in the next

Purchases for the quarter = 45% of next quarter's forecast sales

Payment period = 36 days

Wages, taxes, etc. = 20% of sales

Q1 Q2 Q3 Q4 Q1

Sales (in millions) $165 $185 $205 $235 $180

Cash collections:

50% quarter of sales 82.50 92.50 102.50 117.50

50% next quarter 71.00 82.50 92.50 102.50

Total cash collections 153.50 175.00 195.00 220.00

Purchases 83.25 92.25 105.75 81.00

Cash Payments:

80% month of purchase 66.60 73.80 84.60 64.80

20% following purchase 16.65 18.45 21.15

Total purchases payments 66.60 90.45 103.05 85.95

Wages, taxe, etc. 33 37 41 47

Interest and dividends 16 16 16 16

Capital outlay 99

Total cash disbursements 115.60 242.45 160.05 148.95

Net cash inflow 37.90 -67.45 34.95 71.05

Cash, beginning = $78 million

Desired minimum balance = $40 million

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