Question
Intro It is the beginning of January. Actual sales for the previous quarter (Q4) and estimated sales for the next five quarters are as follows
Intro
It is the beginning of January. Actual sales for the previous quarter (Q4) and estimated sales for the next five quarters are as follows (in $ million):
Intro It is the beginning of January. Actual sales for the previous quarter (Q4) and estimated sales for the next five quarters are as follows (in $ million):
You collect 50% of sales in the current quarter and the remainder in the following quarter. You expect to spend 40% of the following quarter's sales on purchases of components from suppliers, and to pay 70% of those purchases in the current quarter and the remainder in the following quarter. Wages and other expenses add up to 30% of each quarter's sales. You have to pay $4 million in interest and dividends each quarter, and plan to spend $7 million on new machinery in Q3. Assume that each quarter has 90 days, sales occur evenly throughout the quarter and all other cash flows occur at the end of the quarter. Part 1 What is your expected net cash flow in Q1 (in $ million)? Answer: Expected net cash flow in Q1: $ 2.6072 million Correct
Part 2 What is your expected net cash flow in Q2 (in $ million)? Expert Answer Part 2 : Answer : Expected net cash flow in Quarter 2 : $ 2.9384 millions.Correct
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Part 3
What is your expected net cash flow in Q3 (in $ million)?
Answer:
The expected net cash flow in Q3 (in $ million) is -3.7292 Correct
Q3 (in millions) | ||
Cash Inflows | ||
Collection of current quarter sales (27.78*0.5) | 13.89 | |
Collection of previous quarter sales (26.46*0.5) | 13.23 | |
Expected Cash Inflows | 27.12 | |
Cash Payments for | ||
Purchase of components | ||
Current quarter purchase (29.17*40%*70%) | 8.1816 | |
Previous quarter purchase (27.78*40%*30%) | 3.3336 | 11.5152 |
Wages and other expenses (27.78*30%) | 8.334 | |
Interest and dividends | 4.00 | |
New machinery | 7.00 | |
Expected Cash Outflows | 30.8492 | |
Expected Net Cash Flow | -3.7292 Correct |
Part 4
What is your expected net cash flow in Q4 (in $ million)?
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