Working capital cash flow. Tires for Less is a franchise of tire stores througho

Question

Working capital cash flow. Tires for Less is a franchise of tire stores throughout the greater Northwest. It has projected the following unit sales and costs for each tire type for the next our months in the popup window:. The company policy is to have the next month's anticipated sales for each tre type in the warehouse. Shipments are made to the various stores throughout the Northwest from the central warehouse. Calculate the monthly increase or decrease in cash flow for inventory for the first three months of the year given that an increase in inventory is a use of cash and a decrease in inventory is a source of cash. Snow Tires: What is the change in working capital for January? (Round to the nearest dollar) What is the change in working capital for February? 5]) (Round to the nearest dollar.) What is the change in working capital for March? sD(Round to the nearest dollar.) Rain Tires: What is the change in working capital for January? (Round to the nearest dollar.) Enter your answer in each of the answer boxes. 6

Explanation / Answer

snow tires

cost per tire = $42

1) change in working capital for january

projected sells in january - projected sells in february = (44000 - 38000)42 = $252000

2) change in working capital for february

projected sells in february - projected sells in march = (38000 - 14000)42 = $1008000

3) change in working capital for march

projected sells in march - projected sells in april = (14000 - 2000)42 = $504000

Rain tires

cost per tire = $31

1) change in working capital for january

projected sells in january - projected sells in february = (20000 - 36000)31 = -496000= $496000 (use of cash)

2) change in working capital for february

projected sells in february - projected sells in march = (36000 - 46000)31 = $310000 (use of cash)

3) change in working capital for march

projected sells in march - projected sells in april = (46000 - 22000)31 = $744000

All terain tires

cost per tire = $48

1) change in working capital for january

projected sells in january - projected sells in february = (4000 - 5000)48 = $48000 (use of cash)

2) change in working capital for february

projected sells in february - projected sells in march = (5000 - 7000)48 = $96000 (use of cash)

3) change in working capital for march

projected sells in march - projected sells in april = (7000 - 8000)48 = $48000 (use of cash)

All purpose tires

cost per tire = $37

1) change in working capital for january

projected sells in january - projected sells in february = (60000 - 54000)37 = $222000

2) change in working capital for february

projected sells in february - projected sells in march = (54000 - 50000)37 = $148000

3) change in working capital for march

projected sells in march - projected sells in april = (50000 - 60000)37 = $370000 (use of cash)

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