Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. Paymore's cash payments to its suppliers are under the assumption that the firm pays for its goods with a 1-month delay. Therefore, on average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter.

Paymore's customers pay their bills with a 2-month delay. Therefore, on average, one-third of sales are collected in the quarter that the sales were made, and two-thirds are collected in the following quarter.

Assuming that the sales in the last quarter of the previous year were $336, labor and administrative expenses are $65 per quarter, and interest on long-term debt is $40 per quarter.

Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Work out the short-term financing requirements for the firm in the coming year. The firm pays no dividends. The sales forecasts for the next five quarters are as follows:

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Following Year uarter in Coming Year Third First Second Fourth First Quarter Sales forecast S372.00S360.00 S 336.00S384.00 S 384.00 Order size Payment in current Payment in next Collection in current Collection in next Sales in last Labor and administrative e Interest on long-term debt 75% of sales forecast in the next er 2/3 1/3 1/3 2/3 S 336.00 S 65.00 S 40.00 S 40.00 S 30.00 er er er er er er er cash balance Minimum acceptable cash balance Cash Budget uarter First Second Third Fourth Sources of cash Collections on accounts receivable S 348.00 S 368.00 S352.00 S352.00 Uses of cash Payments of accounts payable Labor & administrative expenses Interest on long-term debt 273.00 65.00 40.00 258.00276.00 65.00 40.00 363.00 S381.00 5.00S(29.00) 288.00 65.00 40.00 S393.00 S (41.00 65.00 40.00 Total uses of cash Net cash inflow S 378.00 S S 30.00)S