Question
Q4: Calculating the Cash Budget Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Q1 Q2 Q3 Q4 Sales: $230
Q4: Calculating the Cash Budget Wildcat, Inc., has estimated sales (in millions) for
the next four quarters as follows:
Q1 Q2 Q3 Q4
Sales: $230 $195 $270 $290
Sales for the first quarter of the year after this one are projected at $250 million.
Accounts receivable at the beginning of the year were $79 million. Wildcat has a 45-day collection period.
Wildcat's purchases from suppliers in a quarter are equal to 45 percent of the next quarter's forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 30 percent of sales. Interest and dividends are $15 million per quarter.
Wildcat plans a major capital outlay in the second quarter of $90 million.
Finally, the company started the year with a $73 million cash balance and wishes
to maintain a $35 million minimum balance.
a.find the cash budget for Wildcat by filling in the following:
WILDCAT, INC.
Cash Budget
(in millions)
Q1Q2Q3Q4
Beginning cash balance
Net cash inflow
Ending cash balance
Minimum cash balance
Cumulative surplus (deficit)
b.Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 3 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 2 percent per quarter. find the short-term financial plan by filling in the following schedule. What is the net cash cost (total interest paid minus total investment income earned) for the year?
WILDCAT, INC.
Short-Term Financial Plan
(in millions)
Q1 Q2 Q3 Q4
Beginning cash balance $7330.0030.0030.00
Net cash inflow
New short-term investments
Income from short-term investments
Short-term investments sold
New short-term borrowing
Interest on short-term borrowing
Short-term borrowing repaid
Ending cash balance
Minimum cash balance
Cumulative surplus (deficit)
Beginning short-term investments
Ending short-term investments
Beginning short-term debt
Ending short-term debt
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