Question
Plato Industries' projected sales for the first six months of 2012 are given below: Jan. $250,000 April $300,000 Feb. $340,000 May $350,000 Mar. $280,000 June
Plato Industries' projected sales for the first six months of 2012 are given below:
Jan. | $250,000 | April | $300,000 |
Feb. | $340,000 | May | $350,000 |
Mar. | $280,000 | June | $380,000
|
20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. Plato's projected EBIT for March 2012?
$42,000 | ||
$23,000 | ||
($28,000) | ||
($60,000) |
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