Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Q2 Sales $175 S 195 $215 $245 Q1 Q3 Q4

Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows Q1 Q2 Q3 Q4 Sales $175 $195 $215 $245 Sales for the first quarter of the year after this one are projected at $190 million. Accounts receivable at the beginning of the year were $75 million. Wildcat has a 45-day collection period Wildcats purchases from suppliers in a quarter are equal to 50 percent of the next quarters forecast sales and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $11 million per quarter. Wildcat plans a major capital outlay in the second quarter of $98 million. Finally, the company started the year with a $80 million cash balance and wishes to maintain a $40ilion minimum balance a-1. Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 3 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 2 percent per quarter. Complete the following short-term financial plan for Wildcat. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter 0 wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 3 WILDCAT, INC Short-Term Financial Plan (in millions) Q1 Q2 Q3 $40.00 $40.00 $40.00 $40.00 Target cash balance Net cash inflow New short-term investments Income on short-term investments Short-term investments sold New short-term borrowing Interest on short-term borrowing Short-term borrowing repaid Ending cash balance Minimum cash balance Cumulative surplus (deficit) Beginning short-term investments Ending short-term investments Beginning short-term debt Ending short-term debt a-2. What is the net cash cost for the year under this target cash balance? (Negative amount should be indicated by a minus sign. Enter your answer in millions. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)  

Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Q2 Sales $175 S 195 $215 $245 Q1 Q3 Q4 Sales for the first quarter of the year after this one are projected at $190 million. Accounts receivable at the beginning of the year were $75 million. Wildcat has a 45-day collection period. Wildca's purchases from suppliers in a quarter are equal to 50 percent of the next quarter's forecast sales. and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $11 million per quarter. Wildcat plans a major capital outlay in the second quarter of $98 million. Finally, the company started the year with a S80 million cash balance and wishes to maintain a $40 million minimum balance. a-1. Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 3 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 2 percent per quarter. Complete the following short-term financial plan for Wildcat. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) WILDCAT, INC. Short-Term Financial Plan (in millions) Q1 Q2 Q3 Q4 Target cash balance $ 40.00 $ 40.00 $ 40.00 $ 40.00 Net cash inflow New short-term investments Income on short-term investments Short-term investments sold New short-term borrowing Interest on short-term borrowing Short-term borrowing repaid Ending cash balance Minimum cash balance Cumulative surplus (deficit) Beginning short-term investments Ending short-term investments $ Beginning short-term debt Ending short-term debt a-2. What is the net cash cost for the year under this target cash balance? (Negative amount should be indicated by a minus sign. Enter your answer in millions. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) %24 %24 %24 %24 %24 %24 %24 %24 a-2. What is the net cash cost for the year under this target cash balance? (Negative amount should be indicated by a minus sign. nter your answer in millions. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net cash cost b-1. Complete the following short-term financial plan assuming that Wildcat maintains a minimum cash balance of $20 million. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) WILDCAT, INC. Short-Term Financial Plan (in millions) Q2 Q1 Q3 $ 20.00 S 20.00 $ 20.00 Q4 S 20.00 Target cash balance Net cash inflow New short-term investments Income on short-term investments Short-term investments sold New short-term borrowing Interest on short-term borrowing Short-term borrowing repaid Ending cash balance 24 Minimum cash balance Cumulative surplus (deficit) Beginning short-term investments Ending short-term investments Beginning short-term debt Ending short-term debt b-2. What is the net cash cost for the year under this target cash balance? (Enter your answer in millions. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net cash cost

Step by Step Solution

3.53 Rating (156 Votes )

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Finance

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

10th edition

978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759

More Books

Students also viewed these General Management questions

Question

8. How does direct memory access (DMA) work?

Answered: 1 week ago

Question

How should a lawyer go about the closing speech?

Answered: 1 week ago