Rawhide Outfitters had projected its sales for the first six months of 2012 to be as follows:
Jan. $50,000 April $180,000
Feb. $60,000 May $240,000
Mar. $100,000 June $240,000
Cost of goods sold is 60% of sales.
Purchases are made and paid for two months prior to the sale.
40% of sales are collected in the month of the sale, 40% are collected in the month following the
sale, and the remaining 20% in the second month following the sale. Total other cash expenses are
$40,000/month. The company's cash balance as of March 1st, 2012 is projected to be $40,000, and the
company wants to maintain a minimum cash balance of $15,000. Excess cash will be used to retire
short-term borrowing (if any exists). Fielding has no short-term borrowing as of March 1st, 2012.
Assume that the interest rate on short-term borrowing is 1% per month. How much short term
financing is needed by March 30, 2012?
A) $70,000 B) $15,000 C) $110,000 D) $85,000
D
You might also like to view...
For years, many people thought plastic wrap was almost impossible to use and refused to buy the product. The manufacturer of Saran plastic wrap has spent many advertising dollars advising customers on how to eliminate the problems associated with the use of plastic wrap. What has this manufacturer engaged in?
a. diversification b. product mix expansion c. repositioning d. product line expansion
Chinese direct-response television has learned that there are many obstacles that still need to be overcome, which include all of the following except:
A) consumers' savings rate is very low. B) a limited number of private telephones. C) low penetration of credit cards. D) delivery logistics in Beijing. E) delivery logistics in Shanghai.