Question

Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Sales Q1 $120 Q2 $140 Q3 $160 Q4 $190 Sales for the first quarter of the year after this one are projected at $135 million. Accounts receivable at the beginning of the year were $53 million. Wildcat has a 45-day collection period. Wildcat's purchases from suppliers in a quarter are equal to 40 percent of the next quarter's forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 25 percent of sales. Interest and dividends are $12 million per quarter. Wildcat plans a major capital outlay in the second quarter of $72 million. Finally, the company started the year with a cash balance of 569 million and wishes to maintain a $30 million minimum balance. a. Complete the following cash budget for Wildcat, Inc. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places, e.g., 32.16.) WILDCAT, INC. Cash Budget (in millions) Q2 69.00 $ 18.2 D S Beginning cash balance Net cash inflow 37.4 26.8 64.2 -49.8 52.7 Ending cash balance Minimum cash balance 87.2 -30.00 37.4 -30.00 64.2 -30.00 116.9 -30.00 Cumulative surplus (deficit) 57.2 7.4 $ 34.2 $ 86.9

Short term investments sold is not 57.98 I am stuck on that one

Answer 1

a) Cash Budget (in millions) Beginning cash balance Net cash inflow (Note 1) Q1 Q2 69.00 87.20 18.20 -49.80 Q3 37.40 26.80 Q4 64.20 52.70 Ending cash balance Minimum cash balance 87.20 | 37.40 64.20 | 116.90 | -30.00-30.00 -30.00 - 30.00 Cumulative surplus (deficit) 57.20 7.40 34.20 86.90 b-1 Short-Term Financial Plan Target cash balance Net cash in flow New short-term investments (Note 2) Income from short-term investments (Note 3) Short-term investments sold (Note 2) New short-term borrowing Interest on short-term borrowing Short-term borrowing repaid | Q1 30.00 18.20 -18.98 0.78 0.00 0.00 0.00 0.00 Q2 Q3 Q4 30.00 30.00 30.00 -49.80 26.80 52.70 0.00] -26.99-53.43| 1.16 0.19 0.73 48.64 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Ending cash balance Minimum cash balance 30.00 30.00 | -30.00 -30.00 30.00 -30.00 30.00 -30.00 Cumulative surplus (deficit) 0.00 0.00 0.00 0.00 Beginning short-term investments Ending short-term investments (Note 4) Beginning short-term debt Ending short-term debt 39.00 57.98/ 0.00 0.00 57.98 9.34 9.34| 36.33 0.00 0.00 0.00 | 0.00 36.33 89.75 | 0.00 0.00 b2) net cash cost = 0 - (0.78+1.16+0.19+0.73) -2.85

Note 1: 1.calculation of collection sales collection =50% of current Q +50% of Previous Q Q1 Q2 Q3 Q4 Q1 | 120.00 | 140.00 | 160.00 | 190.00 | 135.00 113.00 | 130.00 | 150.00 | 175.00 2.calculation of payment to supplier Purchases Payments -40% of current Q +60% of Previous Q 01 56.00 52.80 02 64.00 60.80 03 04 76.00 54.00 71.20 | 62.80 | 01 113.00 02 130.00 03 150.00 04 175.00 calculation of net cash flow colletcion Less payments to supplier Wages, taxes, and other expense (25% of sales) capital outlay Interest and dividends total payments net cash flow 71.20 40.00 62.80 47.50 52.80 60.80 30.00 35.00 72.00 12.00 12.00 94.80 179.80 18.20 - 49.80 12.00 123.20 26.80 12.00 122.30 52.70 Note 2: Target cash balance Net cash in flow In come from short-term investments Total Less : Minimum balance New investment/(Investment sold) | Q1 Q2 Q3 Q4 | 30.00 30.00 30.00 30.00 18.20 - 49.80 26.80 52.70 0.78 1.16 0.19 0.73 48.98 - 18.64 56.99 83.43 - 30.00 - 30.00 - 30.00 - 30.00 18.98 - 48.64 26.99 53.43 Note 3: | Beginning short-term investments xinterest rate on investment Income from short-term investments Q1 Q2 39.00 | 57.98 2% 2% 0.78 1.16 Q3 24 9.34 | 36.33 | 2% 2% 0.19 0.73 Note 4: Beginning short-term investments New investment/(Investment sold) Income from short-term investments Q1 Q2 39.00 57.98 18.98 - 48.64 57.98 9.34 Q3 9.34 26.99 36.33 24 36.33 53.43 89.75