Short-term financial plans a.

Short-term financial plans

a. Paymore places orders for goods equal to 75% of its sales forecast for the next quarter. What will orders be in each quarter of the coming year if the sales in the current quarter are expected to be $320 and the sales forecasts for the next five quarters are as follows?

b. Paymore pays for two-thirds of the purchases immediately and pays for the remaining purchases in the next quarter. Calculate Paymore’s cash payments in the coming year.

c. Paymore’s customers pay their bills with a two-month delay. What are the expected cash receipts from sales in the coming year?

d. Now suppose that Paymore’s other expenses are $105 a quarter. Calculate the expected net cash flow for each quarter in the coming year.

e. Suppose that Paymore’s starting cash balance is $40 and its minimum acceptable balance is $30. Work out the short-term financing requirements for the coming year.

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