Wildcat, Inc., has estimated sales (in millions) for the next four quarters as f
ID: 2762356 • Letter: W
Question
Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows:
Sales for the first quarter of the year after this one are projected at $160 million. Accounts receivable at the beginning of the year were $63 million. Wildcat has a 45-day collection period.
Wildcat’s purchases from suppliers in a quarter are equal to 45 percent of the next quarter’s forecasted sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $12 million per quarter.
Wildcat plans a major capital outlay in the second quarter of $92 million. Finally, the company started the year with a $74 million cash balance and wishes to maintain a $40 million minimum balance.
Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 3 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 2 percent per quarter. Complete the following short-term financial plan for Wildcat. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).)
WILDCAT, INC. Short-Term Financial Plan (in millions)
What is the net cash cost for the year under this target cash balance? (Negative amount should be indicated by a minus sign. Enter your answer in millions. Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)
b-1.
Complete the following short-term financial plan assuming that Wildcat maintains a minimum cash balance of $20 million. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).)
WILDCAT, INC. Short-Term Financial Plan (in millions)
What is the net cash cost for the year under this target cash balance? (Negative amount should be indicated by a minus sign. Enter your answer in millions. Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)
NOTEAbove all is one question, this question needs fill the two " WILDCAT, INC. Short-Term Financial Plan (in millions)" forms, and caculate the two net cash costs.
Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows:
Q1 Q2 Q3 Q4 sales $145 $165 $185 $215Explanation / Answer
Q1 Q2 Q3 Q4 mill $ mill $ mill $ mill $ Net Cash inflow in million $ Sales 145 165 185 215 a) Working for Cash inflow from Sales in Million $ Next year 160 opening Accounts Receivable 63 Q1 Q2 Q3 Q4 Collection Period 45 Days Opening AR 63.00 purchase in Qtr 45% of Next quarter forecasted sale Received from the sale of the quarter- 45 collection days 72.50 82.50 92.50 107.50 Creditor payment days 36 Received from the sale of the previous quarter 72.50 82.50 92.50 Wages, taxes and other expenses 30% of Sale Cash Inflow (a) 135.50 155.00 175.00 200.00 Interest and Dividend $6 million per quarter 1) b) Cash outlfow for Purchase of Material in Million $ Wild Cart Inc Short term financial planning Purchase in the Qtr 74.25 83.25 96.75 72.00 $ in Millions Payment Not to be made in the quarter of purchase 14.85 16.65 19.35 14.40 (for 18 days (90-72 days) of purchases) Q1 Q2 Q3 Q4 Target Cash Balance 40.00 40.00 40.00 40.00 Payment made for the purchase in the qtr 59.40 66.60 77.40 57.60 Opening Cash Balance 74.00 40.00 40.00 40.00 Payment of last qtr purchase 14.85 16.65 19.35 Net Cash Inflow 35.10 -63.45 31.95 68.05 Payment for purchases (b) 59.40 81.45 94.05 76.95 New Short term Investment -70.51 -32.75 -70.26 Income on Short term investement- @ 2% per quarter 1.41 0.14 0.80 2.20 c) Cash out flow for wages . Taxes and other expenses (c) 29.00 33.00 37.00 43.00 Short term investment sold - 63.31 - - (20% of Sales) New Short term Borrowing - - - - interest on Short term borrowing - - - - d) Dividend & Interest payment during the Qtr 12.00 12.00 12.00 12.00 short term borrowing repaid - - - - Ending Cash balance 40.00 40.00 40.00 40.00 e) Capital Investment 92.00 minimum cash balance -40.00 -40.00 -40.00 -40.00 Cumulative surplus/(Deficit) 0.00 0.00 0.00 -0.00 f) Net Cash inflow (a)-(b)-(c )- (d)-(e) 35.10 -63.45 31.95 68.05 Beginning Short term Investment - - - - Ending short term investment 70.51 7.20 39.95 110.21 Beginning short term debt - - - - Ending short term Debt - - - - 2) Net cash cost to Maintain $ 40 million per quarter = $ Nil as the company does not borrow any money from outside on interest to maintain the $ 40 million 3) Wild Cart Inc Short term financial planning $ in Millions Q1 Q2 Q3 Q4 Target Cash Balance 20.00 20.00 20.00 20.00 Opening Cash Balance 74.00 20.00 20.00 20.00 Net Cash Inflow 35.10 -63.45 31.95 68.05 New Short term Investment -90.92 -33.17 -70.69 Income on Short term investement- @ 2% per quarter 1.82 0.56 1.22 2.64 Short term investment sold - 62.89 - - New Short term Borrowing - - - - interest on Short term borrowing - - - - short term borrowing repaid - - - - Ending Cash balance 20.00 20.00 20.00 20.00 minimum cash balance -20.00 -20.00 -20.00 -20.00 Cumulative surplus/(Deficit) -0.00 -0.00 0.00 0.00 Beginning Short term Investment - - - - Ending short term investment 90.92 28.03 61.20 131.89 Beginning short term debt - - - - Ending short term Debt - - - - 4) Net cash cost to Maintain $ 20 million per quarter = $ Nil as the company does not borrow any money from outside on interest to maintain the $ 20 million
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