Question
Smoothys collects cash from sales as follows: 40% in the month of sale, 35% in the month following the sale, and 25% two months after
Smoothys collects cash from sales as follows: 40% in the month of sale, 35% in the month following the sale, and 25% two months after the sale. Purchases of raw materials are 60% of expected sales. Purchases are made one month in advance, and suppliers are paid 50% in the month of purchase and 50% the following month. Smoothys has SG&A expenses of $4,000 per month, bank fees are $100 per month, and taxes are $500 per month. Smoothys cash balance at the end of January is forecast to be $2,950. Smoothys December sales and forecasted sales for the new year are shown in the table. Use this information to answer the questions that follow.
Smoothy's Sales Forecast | |
Month | Sales |
December | $13,000 |
January | $10,000 |
February | $15,000 |
March | $20,000 |
April | $26,000 |
PART 1
What are total cash inflows in February?
Question 2
PART 2
What are total cash outflows in March?
Question 3
PART 3
What is the cash balance at the end of March?
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