Question
n addition to the estimates above the business needs 4 percent of revenues as a cash balance, 11 percent of the cost of goods sold
n addition to the estimates above the business needs 4 percent of revenues as a cash balance, 11 percent of the cost of goods sold as an inventory balance, 6 percent of the cost of goods sold as an accounts payable balance, and 5 percent of revenues as accrued expenses balance. All of these balances would be needed at the beginning of each year and are estimated from the year-end annual estimates of revenues and cash expenses given above. The business will end at the end of year 2 and all working capital balances will be collected (or realized) at their face value. Please calculate the incremental investment in working capital needed for years 0,1,and 2, and then recalculate the cash flows for the Lansing store investment. Incremental investment in working capital Year 0___________Year 1___________ Year 2____________ Recalculated cash flows from operations Year 0___________Year 1___________ Year 2____________
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