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Forecasting Payments

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If a firm pays its bills with a 30-day delay, what fraction of its purchases will be paid for in the current quarter? In the following quarter? What if its payment delay is 60 days?

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Forecasting Payments. If a firm pays its bills with a 30-day delay, what fraction of its purchases will be paid for in the current ...

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This explains the steps to calculate the forecasting Payments

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Calculating the Forecasting Payments, Collectors, Net Cash Flow

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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