Your family business is expanding. Based on your experience and in depth knowledge of the market, you have estimated the following results for the first 2 years (8 quarters) of the project.

• Expected revenues for the first two years are as follows.
  • In addition, sales for the 1^st quarter of Year 3 are projected at $370,000.
• General and administrative expenses (wages, taxes, office etc.) are estimated to be 15% of sales.
• Sales salaries and commissions are estimated to be 12% of sales.
• Accounts receivable at the beginning of this expansion are $0.
  • Collection period = 30 days
• Accounts payable at the beginning of the expansion are $0.
  • The Company quarterly purchases from suppliers = 40% of the next quarter's forecasted sales.
  • Suppliers are paid on average in 45 days.
• You will need to buy new equipment & furniture in both Year 1 - Q1 and Q3 for $25,000 ($50,000 total in Year 1).
• To help start the expansion you have secured an initial cash loan from the bank of $50,000. Interest on this loan is $1,500 per quarter. The company will pay back the full $50,000 in the Year 2 - Q4.
• Interest on any additional short-term borrowing is expected to be 2% per quarter. The company required return must be at least this each quarter.
• The Company wishes to maintain a $50,000 minimum balance at all times to best manage its working capital and any unexpected commitments.
• Build a Short-Term Financing Plan using the above information.

Year 1 ('000s) Year 2 ('000s) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Beginning cash balance Net cash flow Ending Cash Balance (before borrowing or repayment) Interest on exiting short-term borrowing New required short-term borrowing Short-term borrowing repaid Ending Cash Balance (after borrowing or repayment) Minimum cash balance Cumulative surplus (deficit) Beginning short-term debt Change in short-term debt Ending short-term debt