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Firm CVS has estimated sales (in millions) for the next four quarters as follows:

Q1 Q2Q3Q4

Sales (in millions) $ 70 $ 100 $ 120 $ 130

Sales for the first quarter of the year after this one are projected at $110 million.

Accounts receivable at the beginning of the year were $23 million. CVS has a 20-day collection period.

CVS’s purchases from suppliers in a quarter are equal to 30 percent of the next quarter’s forecast sales, and suppliers are normally paid in 20 days. Wages, taxes, and other expenses run about 10 percent of sales. Interest and dividends are $7 million per quarter.

CVS plans a major capital outlay in the second quarter of $50 million. Finally, the company started the year with a $35 million cash balance and wishes to maintain a $25 million minimum balance. Short term borrowing rate is 5%, short term lending rate is 3%.

a-Prepare cash collection table [ 15 Points]

b- Prepare cash disbursement table [ 15 Points]

c-Prepare cash budget table [ 20 Points]

d-Prepare short-term financial plan. [ 20 Points]

e- What is the amount of cash generated by short-term financing? [ 5 Points]

Answer :

To set up the cash collection table, we really want to work out the assortments from deals and the planning of these assortments. Given the assortment time of 20 days, we can decide the money assortments for each quarter.

Here is the cash collection tablefor CVS:

Quarter: Q1 Q2 Q3 Q4 Q1 (One Year from now)

Sales (in $M): 70 100 120 130 110

Collection: 70 100 120 130 110

Collection %: 100 percent 100 percent 100 percent 100 percent 100 percent

Cash Collection: 70 100 120 130 110

Explanation:

  • The "Sales" segment addresses the extended deals in huge number of dollars for each quarter.
  • The "Collection" segment demonstrates the full assortment of deals for each quarter since the assortment time frame is 20 days.
  • The "Collection %" segment shows the level of deals gathered for each quarter, which is 100 percent for all quarters.
  • The "Cash Collection" section addresses the money gathered from deals for each quarter, which is equivalent to the deals sum since we accept full assortment.

Learn more about cash collection, from:

brainly.com/question/31686163

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