Old Exam Questions - Current Asset Management - Solutions Page 10 of 21 Pages B. 90 days C. 65 days D. 48 days E. 66 days CCC = ICP + RCP - PDP = 72 + 60 - 45 = 87 days 12. Assume that your company’s budgeted monthly sales are constant at $3,000. Forty percent of its customers pay in the first month and take the 2 percent discount. The remaining 60 percent pay in the month following the sale and don’t receive a discount. Your company’s bad debts are very small and are excluded from this analysis. Purchases for next month’s sales are constant each month at $1,500. Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single month’s cash budget with the information given and determine the average cash gain or (loss) during a typical month for your company. * A. $776 B. $853 C. $740 D. $812 E. $708 Construct a simplified cash budget: Sales $3,000 Collections (same month’s sales) 1,176 (0.98 * 0.40 * $3,000) Collections (last month’s sales) 1,800
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