1. Sailboats Etc. is a retail company specializing in sailboats and other sailing-related equipment. The following table contains financial forecasts as well as current (month 0) working capital levels (see MyFinanceLab for the data in Excel format).

($000)

Month 0

1 2

3 4

5 6

Net Income

$10

$12

$15

$25

$30

$18 Depreciation 2

3 3

4 5

4 Capital Expenditures 1

0 0

1 0

0 Levels of Working Capital Accounts Receivable

$2 3

4 5

7 10 6

Inventory 3

2 4

5 5

4 2

Accounts Payable 2

2 2

2 2

2 2

a. During which month are the firm’s seasonal working capital needs the greatest?

b. When does the firm have surplus cash?