Question:
Your small company was just awarded a lucrative contract to provide hundreds of widgets to the US Government for a total price of $50 million. If you perform well, you'll be on "easy street" with all the follow-on business. It will take you 6 months to produce and deliver the units. The US Government will not provide up front payments (payments prior to delivery) and, is notoriously late on paying "net 30" invoices.
a. What can you do to minimize the negative cash flow of this deal?
b. How are you going to keep your company afloat until you get paid?
Question:
Daniel Sawyer, the CEO of the Sawyer Group, is initiating planning for the company's operations next year, and he wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions. Last year's sales = S0 $350 Last year's accounts payable $40 Sales growth rate = g 30% Last year's notes payable $50 Last year's total assets = A0* $500 Last year's accruals $30 Last year's profit margin = PM 5% Target payout ratio 60%