Fun Toys' fiscal year starts on July 1. The company currently has a zero cash balance, and it plans to purchase new machinery in the fourth quarter at a cost of $100,000,000. The purchase of the machinery will be made with cash because of the discount offered for a cash purchase. Fun Toys wants to maintain a minimum cash balance of $5,000,000 to guard against unforeseen contingencies. Fun Toys' sales are seasonal and are usually very high in the second quarter due to holiday sales. All sales to customers and purchases from suppliers are made with credit, and no discounts are offered or taken. Fun Toys currently has an accounts receivable period of 90 days and an accounts receivable balance of $100,000,000. Projected sales in each quarter next year and for the first quarter of the following year are given in the table below. Fun Toys typically orders supplies each quarter in the amount of 50 percent of the next quarter's projected gross sales, and suppliers are paid in 90 days on average. Wages, taxes, and other costs run about 20 percent of gross sales. Finally, the company has a quarterly interest payment of $10,000,000 on its long-term debt. Prepare a cash balance sheet for the company under the current policies. Does the company have any short-term financing need? Input Area: $ 100,000,000 0% 90 Beginning receivables: Percent uncollectible Collection period (days) % of purchases for next Q sales Payables period (days): % of sales for expenses Interest and dividends Capital expenditure (04) Beginning cash balance Minimum cash balance 50% 90 20% 10,000,000 100,000,000 5,000,000 Q1 100,000,000 100,000,000 $ 02 200,000,000 $ 03 150,000,000 $ 04 100,000,000 Sales next year Sales following year Output Area: With the receivables period shown, we can calculate the percentage of sales collected in the next and current quarters as: % of sales collected in the next quarter: % of sales collected in the current quarter: =Receivable Period/ 90 =(90 - Receivable Period)/90 cerun 01 02 02 03 04 With these projections, we can summarize Fun Toys' projected cash collection as: 01 Sales Cash collections Starting receivables Ending receivables =Starting receivables + Sales received in current quarter =Sales+ Starting receivables - Cash collections With the receivables period shown, we can calculate the percentage of sales collected in the next and current quarters as: % of purchases paid in the next quarter: % of purchases paid in the current quarter: =Payable Period/ 90 =(90 - Payable Period)/90 So, the cash disbursement projections are: Q1 Q2 Q3 Q4 =50% of forecasted sales =Last quarter's purchases * % purchases paid in the next quarter+ Current purchases * % of purchases paid in the current quarter Sales Purchases Uses of cash: Payment of accounts payable Wages, taxes, and other Capital expenditures Long-term financing expenses: Interest and dividends Total cash disbursements =sum of all use of cash The total cash balance for Fun Toys is projected to be: Q1 Q2 Q3 Q4 Total cash receipts Total cash disbursements Net cash flow Cumulative excess cash balance Minimum cash balance Cumulative surplus/(deficit) =Cash collections in Row 35 =Cash disbursements in Row 53 =Cash receipts - cash disbursements = sum of Net cash flow from previous quarters Given as 5,000,000 =Cumulative excess cash balance - Minimum cash balance Fun Toys' fiscal year starts on July 1. The company currently has a zero cash balance, and it plans to purchase new machinery in the fourth quarter at a cost of $100,000,000. The purchase of the machinery will be made with cash because of the discount offered for a cash purchase. Fun Toys wants to maintain a minimum cash balance of $5,000,000 to guard against unforeseen contingencies. Fun Toys' sales are seasonal and are usually very high in the second quarter due to holiday sales. All sales to customers and purchases from suppliers are made with credit, and no discounts are offered or taken. Fun Toys currently has an accounts receivable period of 90 days and an accounts receivable balance of $100,000,000. Projected sales in each quarter next year and for the first quarter of the following year are given in the table below. Fun Toys typically orders supplies each quarter in the amount of 50 percent of the next quarter's projected gross sales, and suppliers are paid in 90 days on average. Wages, taxes, and other costs run about 20 percent of gross sales. Finally, the company has a quarterly interest payment of $10,000,000 on its long-term debt. Prepare a cash balance sheet for the company under the current policies. Does the company have any short-term financing need? Input Area: $ 100,000,000 0% 90 Beginning receivables: Percent uncollectible Collection period (days) % of purchases for next Q sales Payables period (days): % of sales for expenses Interest and dividends Capital expenditure (04) Beginning cash balance Minimum cash balance 50% 90 20% 10,000,000 100,000,000 5,000,000 Q1 100,000,000 100,000,000 $ 02 200,000,000 $ 03 150,000,000 $ 04 100,000,000 Sales next year Sales following year Output Area: With the receivables period shown, we can calculate the percentage of sales collected in the next and current quarters as: % of sales collected in the next quarter: % of sales collected in the current quarter: =Receivable Period/ 90 =(90 - Receivable Period)/90 cerun 01 02 02 03 04 With these projections, we can summarize Fun Toys' projected cash collection as: 01 Sales Cash collections Starting receivables Ending receivables =Starting receivables + Sales received in current quarter =Sales+ Starting receivables - Cash collections With the receivables period shown, we can calculate the percentage of sales collected in the next and current quarters as: % of purchases paid in the next quarter: % of purchases paid in the current quarter: =Payable Period/ 90 =(90 - Payable Period)/90 So, the cash disbursement projections are: Q1 Q2 Q3 Q4 =50% of forecasted sales =Last quarter's purchases * % purchases paid in the next quarter+ Current purchases * % of purchases paid in the current quarter Sales Purchases Uses of cash: Payment of accounts payable Wages, taxes, and other Capital expenditures Long-term financing expenses: Interest and dividends Total cash disbursements =sum of all use of cash The total cash balance for Fun Toys is projected to be: Q1 Q2 Q3 Q4 Total cash receipts Total cash disbursements Net cash flow Cumulative excess cash balance Minimum cash balance Cumulative surplus/(deficit) =Cash collections in Row 35 =Cash disbursements in Row 53 =Cash receipts - cash disbursements = sum of Net cash flow from previous quarters Given as 5,000,000 =Cumulative excess cash balance - Minimum cash balance