1. The Complete Co. has projected their first quarter sales at $7,500, second qu
ID: 2475682 • Letter: 1
Question
1. The Complete Co. has projected their first quarter sales at $7,500, second quarter sales at $8,000, and third quarter sales at $8,400. The firm's cost of goods sold is equal to 55 percent of the next quarter's sales. The accounts receivable period is 45 days and the accounts payable period is 60 days. At the beginning of the first quarter, the firm has an accounts receivable balance of $3,600 and an accounts payable balance of $2,750. The firm pays $1,200 a month in cash expenses and $200 a month in taxes. At the beginning of the first quarter, the cash balance is $300 and the short-term loan balance is zero. During the first quarter, the firm is planning on spending $2,500 for some new equipment. The firm maintains a minimum cash balance of $25. Assume that each month has 30 days. The net cash flow for the first quarter is _____ and the cumulative cash surplus (deficit) at the end of the first quarter, prior to any short-term borrowing, is _____.
$1,733; -$492.
$1,733; -$518.
-$767; -$518.
-$767; -$492.
-$767; -$467.
2.A steak dinner in the U.S. costs $25, while the exact meal costs 300 pesos across the border in Mexico. Purchasing power parity implies that the Peso/$ exchange rate is:
Ps11.25/$1
Ps12.75/$1
Ps12.00/$1
Ps12.50/$1
Ps11.50/$1
3. A U.S. firm has total assets valued at €125,000 located in Germany. This valuation did not change from last year. Last year, the exchange rate was €1.1 = $1. Today, the exchange rate is €0.8 = $1. By what amount did these assets change in value on the firm s U.S. financial statements?
$42,024.43
$44,200.16
$42,613.64
$41,666.67
$43,318.17
a.$1,733; -$492.
b.$1,733; -$518.
c.-$767; -$518.
d.-$767; -$492.
e.-$767; -$467.
Explanation / Answer
question 1
-$767; -$492.
Q1 Receipts=3600+7500/90*45 7350 Q1 Collections =2750+(30/90)*0.55*8000 -4216.67 cash expenses -1200 Tax -200 Purchase Of equipment -2500 Deficit -767 Opening Cash 300 Minumum Cash Balance -25 Short term borrwing -492Related Questions
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