Question

Dynamic Futon forecasts the following purchases from suppliers:

	Jan.	Feb.	Mar.	Apr.	May	Jun.
Value of goods ($ millions)	45	41	38	35	33	33

a. Fifty percent of goods are supplied cash-on-delivery. The remainder are paid with an average delay of 1 month. If Dynamic Futon starts the year with payables of $35 million, what is the forecasted level of payables for each month? (Do not round intermediate calculations. Enter your answers in millions of dollars rounded to 1 decimal place.)

b. Suppose that, from the start of the year, the company stretches payables by paying 30% after 1 month and 10% after 2 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. Assume that Dynamic Futon didn't have any payable balance at the start of the year. (Do not round intermediate calculations. Enter your answers in millions of dollars rounded to 1 decimal place.)

Answer 1