In: Finance
Wright Inc. has forecasted the following quarterly sales amounts for the upcoming year:
Q1 = $746; Q2 = $686; Q3 = $907; Q4 = $808
Wright’s purchases from suppliers in a quarter are equal to 70% of the next quarter's forecasted sales. The payables period is 60 days. Wages, taxes, and other expenses are 17% of sales, and interest and dividends are $62 per quarter. No capital expenditures are planned.
Sales in Q1 of the following year are expected to be 933. What are Wright’s cash disbursements in the first quarter?
Particulars | Q1 | Q2 | Q3 | Q4 | Q5 |
Sales | 746 | 686 | 907 | 808 | 933 |
Less: Purchases @ 70% of Next Quarter | 480 | 635 | 566 | 653 | |
Less: Wages, Taxes, Other Expense @ 17% | 127 | 117 | 154 | 137 | |
Less: Interest & Dividend | 62 | 62 | 62 | 62 | |
EBT | 77 | -128 | 125 | -44 | |
Cash Disbursement | |||||
Particulars | Amount | ||||
1. Payment to Creditors (480/3 Months) $ 160 is due by end of Q1 | 160 | ||||
2. Wages Taxes and other expenses are due in the same month and have to be paid accordingly | 127 | ||||
3. Interst and Divided | 62 | ||||
Total Cash Disbursement | 349 |