Question
Sailboats Etc. is a retail company specializing in sailboats and other sailing-related equipment. The following table contains financial forecasts as well as current (month 0)
Sailboats Etc. is a retail company specializing in sailboats and other sailing-related equipment. The following table contains financial forecasts as well as current (month 0) working capital levels. During which months are the firm's seasonal working capital needs thegreatest? When does it have surplus cash?
($000) 0 1 2 3 4 5 6
Net Income $9.99 $11.75 $14.97 $25.01 $30.07 $18.21
Depreciation 1.95 2.95 3.04 4.08 5.08 4.07
Capital Expenditures 1.15 0.00 0.00 1.19 0.00 0.00
Levels of Working Capital
Accounts Receivable $1.97 $3.04 $3.91 $4.97 $6.95 $9.94 $5.98
Inventory 2.98 2.06 4.09 5.07 4.95 3.95 2.07
Accounts Payable 1.91 2.06 2.07 1.94 1.95 2.04 1.94
To determine Sailboats seasonal working capital needs, we calculate the changes in net working capital for the firm:(Round to two decimal places.)
000 month 1
Change in account receiveable
Change in inventory
Change in account payable
Change in net working capital
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