91Ó°ÊÓ

McConnell Corp. has a book net worth of \(\$ 10,380\). Long-term debt is \(\$ 7,500\). Net working capital, other than cash, is \(\$ 2,105\). Fixed assets are \(\$ 15,190\). How much cash does the company have? If current liabilities are \(\$ 1,450\), what are current assets?

Indicate the impact of the following on the cash and operating cycles, respectively. Use the letter \(I\) to indicate an increase, the letter \(D\) for a decrease, and the letter \(N\) for no change. 1\. The terms of cash discounts offered to customers are made less favorable. 2\. The cash discounts offered by suppliers are increased; thus, payments are made earlier. 3\. An increased number of customers begin to pay in cash instead of with credit. 4\. Fewer raw materials than usual are purchased. 5\. A greater percentage of raw material purchases are paid for with credit. 6\. More finished goods are produced for inventory instead of for order.

The following is the sales budget for Shleifer, Inc., for the first quarter of 2010 : $$ \begin{array}{|cccc} \hline & \text { January } & \text { February } & \text { March } \\ \hline \text { Sales budget } & \$ 173,000 & \$ 184,000 & \$ 205,000 \end{array} $$ Credit sales are collected as follows: 65 percent in the month of the sale. 20 percent in the month after the sale. 15 percent in the second month after the sale. The accounts receivable balance at the end of the previous quarter was \(\$ 79,800\) ( \(\$ 57,200\) of which were uncollected December sales). 1\. Compute the sales for November. 2\. Compute the sales for December. 3\. Compute the cash collections from sales for each month from January through March.

The sales budget for your company in the coming year is based on a 20 percent quarterly growth rate with the first-quarter sales projection at \(\$ 150\) million. In addition to this basic trend, the seasonal adjustments for the four quarters are \(0,-\$ 16,-\$ 8\), and \(\$ 21\) million, respectively. Generally, 50 percent of the sales can be collected within the quarter and 45 percent in the following quarter; the rest of the sales are bad debt. The bad debts are written off in the second quarter after the sales are made. The beginning accounts payable balance is \(\$ 72\) million. Assuming all sales are on credit, compute the cash collections from sales for each quarter.

Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Sales for the first quarter of the year after this one are projected at \(\$ 240\) million. Accounts receivable at the beginning of the year were \(\$ 68\) 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 \(\$ 12\) million per quarter. Wildcat plans a major capital outlay in the second quarter of \(\$ 80\) million. Finally, the company started the year with a \(\$ 64\) million cash balance and wishes to maintain a \(\$ 30\) million minimum balance. 1\. Complete a cash budget for Wildcat by filling in the following: 2\. 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. Prepare a 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?