Emerald City Umbrellas sells umbrellas and rain gear in Seattle, so its sales are fairly level across
Question:
Emerald City Umbrellas sells umbrellas and rain gear in Seattle, so its sales are fairly level across the year. However, it is branching out to other markets where it expects demand to be much more variable across the year. It expects sales in its new market of:
It carries inventory equal to 20% of next quarter's sales, has accounts payable of 10% of next quarter's sales, and accounts receivable of 20% of this quarter's sales.
a. Assume that it starts with $4000 in inventory, $2000 in accounts payable, and no accounts receivable for the new market. Forecast its working capital levels and changes over the four quarters.
b. If Emerald City Umbrellas has net income equal to 20% of sales, what will its financing needs be over the quarter?
The following table includes quarterly working capital levels for your firm for the next year. Use it to answer Problems3–7.
Accounts PayableAccounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
a Current Q1 Q2 Q3 Q4 Accounts receivable 0 4000 10...View the full answer
