Intro It is the beginning of January. Actual sales for the previous quarter (Q4) and...
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Accounting
Intro
It is the beginning of January. Actual sales for the previous quarter (Q4) and estimated sales for the next five quarters are as follows (in $ million):
Quarter
Q4
Q1
Q2
Q3
Q4
Q1
Sales
27
28.35
29.77
31.26
32.82
34.46
You collect 50% of sales in the current quarter and the remainder in the following quarter. You expect to spend 40% of the following quarter's sales on purchases of components from suppliers, and to pay 70% of those purchases in the current quarter and the remainder in the following quarter. Wages and other expenses add up to 30% of each quarter's sales.
You have to pay $4 million in interest and dividends each quarter, and plan to spend $7 million on new machinery in Q3.
Assume that each quarter has 90 days, sales occur evenly throughout the quarter and all other cash flows occur at the end of the quarter.
Attempt 1/10 for 8.5 pts.
Part 1
What is your expected net cash flow in Q1 (in $ million)?
Submit
Attempt 1/10 for 8.5 pts.
Part 2
What is your expected net cash flow in Q2 (in $ million)?
Submit
Attempt 1/10 for 8.5 pts.
Part 3
What is your expected net cash flow in Q3 (in $ million)?
Submit
Attempt 1/10 for 8.5 pts.
Part 4
What is your expected net cash flow in Q4 (in $ million)?
Submit
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