A firm’s net working capital is proportional to its sales. Historically, inventory is 10.00% of sales,...
A firm’s net working capital is proportional to its sales. Historically, inventory is 10.00% of sales, accounts receivable is 20.00% of sales, and accounts payable is 12.00% of sales. Below, we have the sales forecast for the upcoming four years: (in millions)
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
|---|---|---|---|---|---|
| Sales | $5.43 | $8.81 | $14.08 | $17.75 | $19.00 |
What will be the balance sheet value of NWC for year 1? (answer in terms of millions, x.xx million)
What will be the investment in NWC for year 1? (answer in terms of millions. Answer will be a positive number)
What will be the balance sheet value of NWC for year 2? (answer in terms of millions)
What will be the investment in NWC for year 2? (answer in terms of millions, xx.xx million)
Homework Answers
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A firm’s net working capital is proportional to its sales. Historically, inventory is 10.00% of sales,...
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A firm’s balance sheets for year-end 2011 and 2012 contain the following data. All items are...
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Using the attached information to develop and complete a Sources and Uses of Net Working Capital...
Using the attached information to develop and complete a Sources and Uses of Net Working Capital Statement below. The Change in the Net Working Capital Year Current Assets - Current Liabilities - Net Working Capital 2016 2017 Change in Net Working Capital The Sources and Uses of Net Working Capital Sources of NWC Uses of NWC Profits (Retained Earnings) S Payment of dividends Sales of fixed assets Purchase of fixed assets Sales of investments Purchase of investments Long-term loans taken...
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Wildcat, Inc., has estimated sales (in
millions) for the next four quarters as follows:
Sales for the first quarter of the following year are projected
at $145 million. Accounts receivable at the beginning of the year
were $57 million. Wildcat has a 45-day collection period.
Wildcat’s purchases from suppliers in a quarter are equal to 50
percent of the next quarter’s forecast sales, and suppliers are
normally paid in 36 days. Wages, taxes, and other expenses run
about 20 percent...
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