CASE 3

1. United Parcel Service (UPS) provides package delivery services throughout the United States and the World. Discuss the impact of the seasonal variations in the delivery business for forecasting the firms financing requirements.

2. Discuss the shortcomings of the percent of sales method of financial forecasting

3. What would be the probable effect on a forms cash position of the following events?

a. Rapidly rising sales b. A delay in the payment of payables

c. A more liberal credit policy on sales (to the firms customers)

d. Holding larger inventories

4. A cash budget is usually thought of as a means of planning for future financing needs. Why would a cash budget also be important for a firm that has excess cash on hand?