9. Cash budget (S30.2)

a. Paymore places orders for goods equal to 75% of its sales forecast for the next quarter.

What will orders be in each quarter of the coming year if the sales in the current Chapter 30 Financial Planning 881 quarter are expected to be $320 and the sales forecasts for the next five quarters are as follows?

Quarter in Coming Year Following Year First Second Third Fourth First Quarter Sales forecast, $ 372 360 336 334 384

b. Paymore pays for two-thirds of the purchases immediately and pays for the remaining purchases in the next quarter. Calculate Paymore’s cash payments in the coming year.

c. Paymore’s customers pay their bills with a two-month delay. What are the expected cash receipts from sales in the coming year?

d. Now suppose that Paymore’s other expenses are $105 a quarter. Calculate the expected net cash flow for each quarter in the coming year.

e. Suppose that Paymore’s starting cash balance is $40 and its minimum acceptable balance is $30. Work out the short-term financing requirements for the coming year.