Assume a tire store does the following:

One supplier of tires, who supplies one half of the tires, gives them 20 days to pay for tires they purchase.

One supplier of tires, who supplies one fourth of the tires, gives them 40 days to pay for tires they purchase.

One supplier of tires, who supplies one fourth of the tires, makes them pay cash as soon as they pick up the tires.

All of the customers pay cash when they buy the tires, except the large trucking companies, which make up 10% of their sales business. The are given 60 days to pay for tires purchased.

Custom tires, making up one half of their business, sit on the shelf an average of 30 days.

The other half of their business is in tires that fill the warehouse, and they average about 1,000 tires at any given time in warehouse inventory. They sell about 100 of those tires each day.

1. If we want to estimate the days of payables for cost of goods sold, what is the average days of payables for store in this case? ____________

2. If we want to estimate the days of receivables, what is the average days of receivables for store in this case? ____________

3. If we want to estimate the days of inventory, what is the average days of inventory for store in this case? ___________

4. Assume instead the average days of payables for the cost of goods sold expense was 25 days, and the total expense for the year was $365,000. What is the balance of Accounts Payable that you would forecast at the end of the year? ____________

5. Using the same numbers from the question above, and assuming no change, what is the balance of Accounts Payable that you would forecast half way into the following year (June 30 of the next year)? (This has a simple answer, and is to test your understanding of the concept.) __________

6. Assume instead the average days of inventory was 10 days, and the Cost of Goods Sold for the year was $3,650,000 ($10,000 per day). What is the balance of Inventory that you would forecast at the end of the year? ____________

7. Using the same numbers from the question above, and assuming no change, what is the balance of Inventory that you would forecast one month (1/12th of a year) into the following year (about January 31 of the next year)? (This has a simple answer, and is to test your understanding of the concept.) ____________

8. Assume the store is expected to be up to full operations after 90 days, with a cash-to-cash cycle of 20 days of inventory, 20 days of accounts receivable, and 10 days of accounts payable. Assume also the full operations Accounts Payable is forecasted at $50,000, the Inventory at $500,000, and Accounts Receivable at $150,000. And assume during the first year of operations there will be no profits left after paying only the interest and dividends required by its investors.

If the company goes to Bank A for investment funds in the form of a loan, and can only borrow at the start of the year and not later in the year, what amount of cash does the company need from Bank A to cover the above amounts of inventory, receivables and payables, all combined together, for the first year? ___________