KIN356ProblemSet6 - SEP OCT NOV DEC Cash Flow 1200 6800...

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Griffin Warner Problem Set Six 1.) Net assets = Assets – liabilities NA = .5 (120000) = 600,000 Return on Sales = 1,200,000 (0.08) = 96,000 Asset buildup = Sales increase (.5) = 600,000 (.5) = 300,000 Bank acct 120000 Sales 600000 1200000 NA 300000 600000 Sales Return 96000 Asset Buildup -300000 Beginning cash – asset buildup + profit 120,000 – 300,000 = -180,000 + 96,000 = $-84,000 So, no his optimistic outlook for his cash position does NOT appear to be correct. 2.) Last year’s sales = 200 units ($160) = $32,000 This year’s sales = 250 units ($176) = $44,000 Returned merch = total sales (.05) = $44,000 (.05) = $2,200 Net dollar sales projection = 44,000 – 2,200 = $41,800 The net dollar sales projection for this year would be $41,800 3.) Net Cash flow = sales (.2) Next month Credit returns = sales (.4) Two-month credit returns = sales (.6) Cash Receipts Schedule SEP OCT NOV DEC Sales 6000 10000 16000 12000 Cur. Coll.20% 1200 2000 3200 2400 Prev. Coll. 4800 8000 12800 Cash Receipts 6800 11200 15200 Cash budget w/borrowing and repayment provisions
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Unformatted text preview: SEP OCT NOV DEC Cash Flow 1200 6800 11200 15200 Beg. Balance 5000 6200 5000 3200 Cum. Balance 6200 13000 16200 18400 Monthly loan-8000-13000-6000 Cum. Loan End Balance 6200 5000 3200 12400 4.) Sales (profit margin) = $200M (.12) = $24M in profit Divident payout = $200M (.4) = $80M Sales increase = $200M (.15) = $30M + $200M = $230M Next years profit = $230M (.12) = $27.6M a.) Profits dividends = $27.6M - $92M = $(64.4)M The (64.4M) resulting from the large amount of dividends compared to profit means that external financing will be required for the company during the coming year. b.) If profits = 14% and dividends = 70% Profits dividends = 32.2M - 161M = $(128.8) M Even with profits increasing, dividends to be paid increased by such a large amount that JumpCampanellis would need to finance $128.8M externally in order to keep paying its extremely high dividends....
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KIN356ProblemSet6 - SEP OCT NOV DEC Cash Flow 1200 6800...

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