Homework Answers
| Description | Dec. | Jan. | Feb. | March | April | May | June | July | Aug. | Sep. | Oct. | Total |
| Sales ($M) | 10.00 | 12.00 | 13.00 | 14.00 | 14.00 | 12.00 | 14.00 | 15.00 | 104.00 | |||
| Collection | ||||||||||||
| 15% in the same month (Sales*15%) | 1.50 | 1.80 | 1.95 | 2.10 | 2.10 | 1.80 | 2.10 | 2.25 | - | - | 15.60 | |
| 45% one month later | - | 4.50 | - | 5.40 | 5.85 | 6.30 | 6.30 | 5.40 | 6.30 | 6.75 | - | 46.80 |
| 40% 2 months after | - | - | 4.00 | - | 4.80 | 5.20 | 5.60 | 5.60 | 4.80 | 5.60 | 6.00 | 41.60 |
| Total Collection | 1.50 | 4.50 | 5.80 | 7.35 | 12.75 | 13.60 | 13.70 | 13.10 | 13.35 | 12.35 | 6.00 | 104.00 |
| Net of Sales and collection | 8.50 | (4.50) | 6.20 | 5.65 | 1.25 | 0.40 | (1.70) | 0.90 | 1.65 | (12.35) | (6.00) | |
| (10-1.5) | (0-4.5) | (12-5.8) | (13-7.35) | (14-12.75) | (14-13.60) | (12-13.70) | (14-13.10) | (15-13.35) | (0-12.35) | (0-6) | ||
| Receivables | 8.50 | 4.00 | 10.20 | 15.85 | 17.10 | 17.50 | 15.80 | 16.70 | 18.35 | 6.00 | (0.00) | |
| (0+8.5) | (8.50-4.5) | (4+6.20) | (10.20+5.65) | (15.85+1.25) | (17.10+0.40) | (17.50-1.70) | (15.80+0.90) | (16.70+1.65) | (18.35-12.35) | (6-6) |
(a) Cash receipts for June - $13.70 Million
(b) Receivables for the month of August - $18.35 million
(c)
| July Receovable ($M) | $16.70 million |
| Factoring @ 75% (16.70*75%) | $ 12.53 million |
| Loan | $9 million |
It is advisable to go for factoring as factoring gives more cash flow of $12.53 million than loan of $ 9 million.
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