King Fisher Aviation purchases from suppliers in a quarter are equal to 65% of the next quarter's forecast sales. The payables period is 30 days. Wages, taxes, and other expenses are 25% of sales, and interest and dividends are $68 per quarter.
Projected quarterly sales are as follows.
Quarter 1 $1,300
Quarter 2 $1,400
Quarter 3 $1,400
Quarter 4 $1,200
Sales for the first quarter of the next year are projected to be $1,500. Calculate the company's cash outlays, by completing the following for each of the four quarters.
Payment of accounts
Wages, taxes, and other expenses
Long-term financing expenses (interest and dividends)
Total
What do you recommend to King Fisher regarding changing their 30 day collection period? Explain your reasoning.