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4. You were recently hired to improve the financial condition of Idaho Springs Hardware, a...

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Finance

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4. You were recently hired to improve the financial condition of Idaho Springs Hardware, a small chain of three hardware stores in Colorado. On your first day the owner, Chuck Vitaska, told you that the biggest problem facing the firm has been periodic unexpected cash shortages that have made it necessary for him to delay wage payments to his employees. Having recently received a degree in finance, you immediately realize that your first priority is to develop a cash budget and to arrange for a short- term borrowing agreement with the firm's bank. After looking at the firm's past financial records, you developed a sales forecast for the remainder of the year, as is presented in the following table. Month June 2017 July August September Sales Month Sales $64,900 51,700 45,100 $68.200 October 80,300 November 83,600December 77,000 In addition to the seasonality of sales, you have observed several other patterns. Individuals account for 40% of the firm's sales, and they pay in cash. The other 60% of sales are to contractors with credit accounts, and they have up to 60 days to pay. As a result, about 20% of sales to

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