Question

1.      The financial staff at Lehman Inc., a wholesale distributor has estimated the following sales figures for the first half of 2019:

Month	Sales
January	$100,000
February	$120,000
March	$150,000
April	$180,000
May	$150,000
June	$120,000
July	$150,000
August	$180,000

Actual November and December 2018 sales were $200,000 and $90,000, respectively. Cash sales are 45% of the total and the rest are on credit. About 70% of credit sales are typically collected one month after the sale and 30% the second month. Monthly inventory purchases represent 50% of the following month’s sales. The firm pays 40% of its inventory purchases in cash and the remainder in the following month. Wages are expected to be 25% of the month’s sales, plus commissions to sales associates estimated to be 10% of collectable sales. A major capital expenditure of $22,000 is expected in April and a quarterly dividend of $10,000 will be paid to shareholders in March and June. Monthly rent is $2,500 and other maintenance expenses are estimated at 15% of sales. The firm has an ending cash balance of $20,000 for December 2018.

Required:

b)      Consider three scenarios where inventory purchases constitute 30%, 40%, and 50% of the next month’s sales. For each one of these scenarios assume that sales will be 5% better than expected, exactly as expected, or 5% worse than expected. The CEO has asked you to use the Scenario Manager to evaluate each scenario. (10 pts)

PLEASE SHOW WHAT YOU ARE TYPING INTO THE SCENARIOS VALUE BOXES!!!!!!!!!!!!!!!!!!!!!

Answer 1

Answer-