Toys-4-Kids manufactures plastic toys. Sales and production are highly seasonal. Below i...

Toys-4-Kids manufactures plastic toys. Sales and production are highly seasonal. Below is a quarterly pro forma forecast indicating external financing needs for 2015. Assumptions are in parentheses.

a. How do you interpret the negative numbers for income taxes in the first two quarters?

b. Why are cash balances in the first two quarters greater than the minimum required $200,000? How were these numbers determined?

c. How was “external financing required,” appearing at the bottom of the forecast, determined?

d. Do you think Toys-4-Kids will be able to borrow the external financing required as indicated by the forecast?