Using the following information based on expected sales to forecast the monthly cash collections, accounts receivable balance, monthly cash disbursements, net cash flows, and cash surplus / deficit at the end of each month in the second quarter of 2016 (April - June 2016). Do not allow your firm to have a cash balance below the minimum cash balance and only borrow what you need.
a. All sales are made on credit. In March 2016, sales were $50,000. In April 2016, sales are expected to be $50,000. In May 2016, sales are expected to be $100,000. In June 2016, sales are expected to be $400,000.
b. The firm's total sales in 2015 were $2,028,000. The firm's accounts receivable balance on January 1, 2015 was $35,000. The firm's accounts receivable balance on December 31, 2015 was $65,000.
c. Accounts payable are 60% of sales
d. Operating expenses are 10% of sales
e. The firm plans to purchase equipment in April costing $125,000
f. Beginning Cash Balance = $25,000
g. Minimum Cash Balance = $5,000
h. Assume there is an annual interest rate of 24% on short term debt and that the firm starts with no short term borrowing.
Question 1
What is the firm's accounts receivable turnover?
Question 2
What is the firm's accounts receivable period?
Question 3
What is the firm's accounts receivable balance at the beginning of April 2016?
Question 4
What is the firm's total cash collections for the month of April 2016?
Question 5
What is the firm's total cash collections for the month of May 2016?
Question 6
What is the firm's total cash collections for the month of June 2016?
Question 7
What is the firm's total cash disbursements for the month of April 2016?
Question 8
What is the firm's total cash disbursements for the month of May 2016?
Question 9
What is the firm's total cash disbursements for the month of June 2016?
Question 10
What is the firm's short term debt at the end of April 2016?
Question 11
What is the firm's short term debt at the end of May 2016?
Question 12
What is the firm's short term debt at the end of June 2016?