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    Forecasting

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    1. Forecasting Payments. Calculate Paymore's cash payments to its suppliers under the assumption that the firm pays for its goods with a 1-month delay. Therefore, on average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter.

    2. Forecasting Collections. Now suppose that Paymore's customers pay their bills with a 2-month delay. What is the forecast for Paymore's cash receipts in each quarter of the coming year? Assume that sales in the last quarter of the previous year were $336.

    3. Forecasting Net Cash Flow. Assuming that Paymore's labor and administrative expenses are $65 per quarter and that interest on long-term debt is $40 per quarter, work out the net cash inflow for Paymore for the coming year using a table like Table 19-6, Panel B.

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    Solution Preview

    Please see the attachment. Please see the cell formula to understand how the figures in the cell are calculated.

    1. Forecasting Payments. Calculate Paymore's cash payments to its suppliers under the assumption that
    the firm pays for its goods with a 1-month delay. Therefore, on average, two-thirds of purchases are
    paid for in the quarter that they are purchased, and one-third are paid in the following quarter.

    2. Forecasting Collections. Now suppose that Paymore's customers pay their bills with a 2-month delay.
    What is the forecast for Paymore's cash receipts in each quarter of the coming year? Assume ...

    Solution Summary

    The solution explains how to calculate the forecasted payments, collections and net cash flow

    $2.19

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