FINANCIAL MANAGEMENT

FINANCIAL MANAGEMENT

Financial Management

Items 1-4 Vertical Ladder Company (VLC) forecasts that its sales for January through April will be P 60,000, P 70,000, P 90,000, and P 80,000, respectively. All sales are made on credit, and past experience indicates that 30 percent of the sales will be collected in the month of the sales and the remaining 70 percent will be collected the following month. Customers who pay in the month of the sale will take 2 percent cash discount offered by VLC for paying early. VLC normally purchases and pays the raw materials, which cost 55% of the sales prices, one month prior to selling the finished products. Employees wages represent 25 percent of the sales price, and rent is P 3,000 per month. At the beginning of February, VLC expects p 4,000 cash, which is P 1,000 greater that its target cash balance. Using the information provided, construct a cash budget for February and March 1. The total cash receipts for February and March are a. 61,600 and 74,200 respectively b. 74,200 and 85,400 respectively c. 70,000 and 69,700 respectively d. 56,000 and 70,000 respectively 2. The total cash disbursements for February and March are a. 61,600 and 74,200 respectively b. 74,200 and 85,400 respectively c. 70,000 and 69,700 respectively d. 56,000 and 70,000 respectively 3. The net cash flows for Feb. and March are a. (7,400) and (2,700) respectively b. (8,400) and 4,700 respectively c. 4,000 and 4,400 respectively d. (8,800) and 600 respectively 4. How much is the cash surplus (shortage) for Feb. and March? a. (7,400) and (2,700) respectively b. (8,400) and 4,700 respectively c. 4,000 and 4, 400 respectively d. (8,800) and 600 respectively