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    Book used - Corporate Finance, 8th edition by Ross, Westerfield, Jaffe.
    Problems: Chapter 26, #5 and #8 and Chapter 28, #4

    All calculations must be shown. For problems that have an Excel template, be sure to download the template from the publisher's web site, and save as an Excel file.

    Chapter 26: Problems 5 and 8 (both chapter 26 problems have a template)

    Chapter 28: Problem 4 (template is available)

    Calculating Cash Collections; the Litzenberger Company has projected the following quartely sales amounts for the coming year

    sales: Q1 -$800, Q2 - $760, Q3 -$940, Q4 -$870

    a. Accounts receivable at the beginning of the year are $300. Litzenberger has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following:
    Q1 Q2 Q3 Q4

    Beginning receivables
    Cash Collections
    Ending receivables

    b. Rework (a) assuming a collection period of 60days
    c. Rework (a) assuming a collection period of 30 days

    Calculating payments - The Thakor Corporation's purchases from suppliers in a quarter are equal to 75 percent of the next quarter's forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 20 percent of sales, and interest and dividends are $60 per quarter. No capital expenditures are planned.

    Here are the projected quartely sales:

    Q1 Q2 Q3 Q4
    sales $750 $920 $890 $790

    Sales for the first quarter of the following year are projected at $970. Calculate the company's cash outlay by completing the following:

    Q1 Q2 Q3 Q4
    Payment of accounts
    Wages, Taxes, other expenses
    Long-term financing expenses
    (interest and dividends)

    Problems: Chapter 28, question #4
    Size of Accounts Receivable - Vitale, Baby!, Inc., has weekly credit sales of $18,000, and the average collection period is 29 days. The cost of production is 80 percent of the selling price. What is Vitale's average accounts receivable figure?

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    Solution Summary

    The solution explains various finance questions relating to cash collections, cash payments and average accounts receivable