Compute the expected cash collections during the months

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Reference no: EM131815461

A trader buys 200 shares of a stock on margin. The price of the stock is 20 USD. The initial margin is 60% and the maintenance margin is 30%. How much money does the trader have to provide initially? For what share price is there a margin call?

In the bond market, you have noticed that the yield curve has

become steeper—specifically, long-term bond rates have increased sharply.

What do you think that this signals about economic prospects and why? State

any assumptions.

CASE 1 A company started a business on January 1, 2017. The company estimated that sales for the first six months would be as follows:

Months Units $ amount of sales January 10,000 units $60,000 sales February 8,000 units $48,000 sales March 15,000 units $90,000 sales April 17,000 units $102,000 sales May 22,000 units $132,000 sales June 30,000 units $180,000 sales

The company sells all items on account and expects collections of accounts receivable to be as follows: 65% in the month of the sale, and the remaining 35% in the month after the sale.

A) Compute the expected cash collections during the months of January, February, March, April, May and June.

B) The company has decided that finished goods inventory at the end of each month should ideally be equal to 45% of next month’s sales. What should budgeted production be for each month?

C) It takes three pounds of raw material to make one unit of finished product. The company wants to keep an ending inventory of raw material equal to 40% of next month’s production needs. How many pounds of raw material should be purchased in each month?

D) The raw material costs $2.75 per pound. The company pays for 75% of its purchases during the month of purchase and the remainder in the following month. How much cash will be disbursed during each month for the purchase of raw material?

E) The projected cash balance on March 1 is $19,500. What is the estimated cash balance at the end of the month? (Prepare a formal cash budget for the month of March.)

Reference no: EM131815461

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