Question

In: Finance

ABC Company has projected Sales of $13181 in January. The sales are expected to grow by...

ABC Company has projected Sales of $13181 in January. The sales are expected to grow by 9% each month. ABC's collection schedule is as follows:

ABC collects 55 percent of its sales in the month of sale and the remainder is collected in the following month. What is the amount of the March cash collections?

Expert Solution

Solution :

Solution:

As per the information given in the question we have

Projected Sales of January = $ 13,181

Sales for the further months after January are expected to Increase by 9 % .

Projected sales of February = ( Sales of January * 109 % )

= $ 13,181 * 109 % = $ 14,367.2900

Projected sales of March = ( Sales of February * 109 % )

= $ 14,367.2900 * 109 % = $ 15,660.3461

As per the information given in the question

The total cash collections of a given month = 55 % of sales made in the given month + 45 % of sales made in the month before i.e, the preceding month

Thus the total cash collections made in March = 55 % of sales made in the month of March + 45 % of sales made in Month of February

Hence the total of March cash collections = ( 55 % * $ 15,660.3461 ) + ( 45 % * 14,367.2900 )

= $ 8,613.1904 + $ 6,465.2805 = $ 15,078.4709

The amount of the March cash collections = $ 15,078.4709

jeff jeffy answered 1 year ago

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