Toys-4-Kids manufactures plastic toys. Sales and production are highly seasonal. The following is a quarterly pro forma

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Toys-4-Kids manufactures plastic toys. Sales and production are highly seasonal. The following is a quarterly pro forma forecast indicating external financing needs for 2018. Assumptions are in parentheses.

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a. How do you interpret the negative numbers for income taxes in the first two quarters?

b. Why are cash balances in the first two quarters greater than the minimum required $200,000? How were these numbers determined?

c. How was ?external financing required? (appearing at the bottom of the forecast) determined?

d. Do you think Toys-4-Kids will be able to borrow the external financing required as indicated by the forecast?

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