Reference no: EM132974014

In March, Hiruit should collect:

Hiruit company's sales in December were $5,500. It expects sales to increase 10% in January and February and 15% in March. All of its sales are made on credit. The typical collection pattern is:

Collections                Percentage of total receivables

In month of sale        10%

In second month        70%

In third month          15%

Not collectable        5%

Gross margin is 30%. Inventory levels at the end of December are $900 and are expected to grow at the same rate as sales. Purchases are paid for the month after they are made. Net accounts receivable at the end of December are $400.

Problem 1: Gupta Corporation has forecasted its need for external funding in the following year. It needs to raise $2 million in either debt or equity. It would like to minimize its need for external funding without decreasing its projected growth. What would reduce its need for additional funding?