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Problem 1 9 - 1 1 Short - Term Financing Requirements ( LO 3 ) Paymore Products places orders for goods equal to 7 5
Problem ShortTerm Financing Requirements LO
Paymore Products places orders for goods equal to of its sales forecast in the next quarter which has been provided in the table
below.
Paymore's labor and administrative expenses are $ per quarter and interest on longterm debt is $ per quarter. Suppose that
Paymore's cash balance at the start of the first quarter is $ and its minimum acceptable cash balance is $ On average, onethird
of sales are collected in the quarter that they are sold, and twothirds are collected in the following quarter. Assume that sales in the
last quarter of the previous year were $ Also, one third of the orders are paid for in the current month and then two thirds of the
next quarter's orders are paid in advance. Work out the shortterm financing requirements for the firm in the coming year using the
above table. The firm pays no dividends.
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Negative amounts should
be indicated by a minus sign.
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