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One of your clients asked for your help estimating the working capital requirements associated with a proposed investment. The projected financial information for the first
One of your clients asked for your help estimating the working capital requirements associated with a proposed investment. The projected financial information for the first five years is shown following: 1 2 3 4 5 Sales 949.00 1,200.00 1,000.00 1,500.00 800.00 Cost of Sales 600.00 840.00 750.00 1,125.00 600.00 Gross Profit 349.00 360.00 250.00 375.00 200.00 13. Assume the clients wants to plan on 29.5 days in Accounts Receivable based on projected sales,a. What '5 the estimated Accounts Receivable for Year Cine rounded to two decimal points? h. In estimating the cash ow for this investment, how would the amount computed in part a be shown in the cash ow projections? i. It would be shown as a negative cash ow as part of the computation of working capital. ii. It would be shown as a positive cash ow as part of the computation ofworking capital. iii. It would not have any impact on the computation of working capital
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