Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / You were recently hired to improve the financial condition of Idaho Springs Hardware a sma...

You were recently hired to improve the financial condition of Idaho Springs Hardware a small chain of three hardware stores in Colorado On your first day the owner

You were recently hired to improve the financial condition of Idaho Springs Hardware, a small chain of three hardware stores in Colorado. On your first day the owner, Chuck Vitaska, told you that the biggest problem facing the firm has been periodic unexpected cash shortages that have made it necessary for him to delay wage payments to his employees. Having recently received a degree in finance, you immediately realize that your first priority is to develop a cash budget and to arrange for a short term borrowing agreement with the firm s bank. After looking at the firm s past financial records, you developed a sales forecast for the remainder of the year, as is presented in the following table. Month........................... Sales.................. Month................. Sales June 2012...................... $62,000.................. October................ 59,000 July............................... 73,000................ November................ 47,000 August........................... 76,000 ................December................ 41,000 September.......................70,000 In addition to the seasonality of sales, you have observed several other patterns. Individuals account for 40% of the firm s sales, and they pay in cash. The other 60% of sales are to contractors with credit accounts, and they have up to 60 days to pay. As a result, about 20% of sales to contractors are paid one month after the sale, and the other 80% is paid two months after t

May 22 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions