Posted: May 1st, 2020

Finance assignment – down east pharmaceuticals

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Down East PharmaceuticalsKathleen Rogan of Down East Pharmaceuticals has engaged you as a consultant. Download and read the scenario. Download and use thespreadsheet for analysis.

Based on the information, do the following:

• Develop the following first year data:
• • The company’s projected average collection period (ACP), also called days sales outstanding (DSO).
  • The company’s projected average daily sales. (Use a 360-day year.)
  • The company’s projected average receivables level.
  • The end-of-year balance sheet figures for accounts receivable and notes payable assuming that notes payable are used to finance the investment in receivables.
  • The projected annual dollar cost of carrying the receivables.
  • The receivables level at the end of March and the end of June. Note that the receivables level forecasts, and all forecasts required by the following questions, should be based on these assumptions: (a) the monthly sales forecasts given in Table 1 are realized and (b) the company’s customers pay exactly as predicted.
  • The company’s forecasted average daily sales for the first three months of operations and for the entire half year.
  • The implied ACP at the end of March and at the end of June.
  • Aging schedules at the end of March and the end of June.
• Construct uncollected balances schedules at the end of March and at the end of June.
• Use the uncollected balances schedule to forecast receivables levels at the ends of March and June for the second year of operations.

This data is to be presented to venture capitalists who will ask questions concerning both the interpretation of the receivables data and the sensitivity of the results to the basic assumptions. Write an interpretation of the results of your analysis.

Present your analysis as a 2-page report in a Word document formatted in APA style.

Receivables Get research paper samples and course-specific study resources under   homework for you course hero writing service – Manage ment Case Study					A?© 2007 South University
Down East Pharmaceuticals
Select the appropriate input values and enter them in cells colored red. Once you do this, the base case solution will appear.
INPUT DATA:			KEY OUTPUT:
Sales Forecasts:			Average Collection Period (Days):
			End of March		39.6
	Month	Sales	End of June		25.7
	January	$100,000
	February	250,000	Receivables Balance:
	March	400,000	End of March		$330,000
	April	600,000	End of June		$300,000
	May	450,000
	June	300,000	Aging Schedules:
				End of March	End of June
Assumed Collection Pattern:			0 – 30:	84.8%	70.0%
			30 – 60:	15.2%	30.0%
Month of sale		30.0%	Over 60:	0.0%	0.0%
One month after sale		50.0%
Two months after sale		20.0%	Payment Pattern:
				End of March	End of June
			Total	90.0%	90.0%
MODEL-GENERATED DATA:
Calculation of Average			End of Month
Collection Period (ACP):			March	June
Receivables balance			$330,000	$300,000
Average daily sales			$8,333.33	$11,666.67
ACP			39.6	25.7
Aging Schedules:
Age of
Account	End of March		End of June
in Days	A/R	%	A/R	%
0-30	$280,000	84.8%	$210,000	70.0%
30-60	50,000	15.2%	90,000	30.0%
60-90	0	0.0%	0	0.0%
Total	$330,000	100.0%	$300,000	100.0%
Uncollected Balances Schedules:
End of March:
			Accts Rec	Remaining
	Month	Sales	for month	Rec/Sales
	January	$100,000	$0	0.0%
	February	250,000	50,000	20.0%
	March	400,000	280,000	70.0%
		Total	$330,000	90.0%
End of June:
			Accts Rec	Remaining
	Month	Sales	for month	Rec/Sales
	April	$600,000	$0	0.0%
	May	450,000	90,000	20.0%
	June	300,000	210,000	70.0%
		Total	$300,000	90.0%

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