Forecasts the purchases from suppliers

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Reference no: EM1349029

Dynamic Futon forecasts the following purchases from suppliers:

Jan. Feb. Mar. Apr. May Jun.
Value of goods ($ millions) 32 28 25 22 20 20

a. Forty percent of goods are supplied cash-on-delivery. The remainder are paid with an average delay of one month. If Dynamic Futon starts the year with payables of $22 million, what is the forecasted level of payables for each month?

b. Suppose that from the start of the year the company stretches payables by paying 40% after one month and 20% after two months. (The remainder continue to be paid cash on delivery.) Recalculate payables for each month assuming that there are no cash penalties for late payment.

Reference no: EM1349029

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