BUSI530Chp19Qes1.pdf - AssignmentPrintView Score 10/20...

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Unformatted text preview: 5/8/2017 Assignment Print View Score: 10/20 Points 50 % 1/7 5/8/2017 1. Assignment Print View Income statement data: Sales Cost of goods sold Balance sheet data: Inventory Accounts receivable Accounts payable Award: 5 out of 5.00 points $ 6,800 6,000 $ 670 290 450 Calculate the accounts receivable period, accounts payable period, inventory period, and cash conversion cycle for the above firm: (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 1 decimal place.) a. Accounts receivable period b. Accounts payable period c. Inventory period d. Cash conversion cycle 15.6 27.4 40.8 28.9 days days days days References Worksheet Learning Objective: 19­01 Understand why the firm needs to invest in net working capital. Income statement data: Sales Cost of goods sold Balance sheet data: Inventory Accounts receivable Accounts payable $ 6,800 6,000 $ 670 290 450 Calculate the accounts receivable period, accounts payable period, inventory period, and cash conversion cycle for the above firm: (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 1 decimal place.) a. Accounts receivable period b. Accounts payable period c. Inventory period d. Cash conversion cycle 15.6 ± 1% 27.4 ± 1% 40.8 ± 1% 28.9 ± 1% days days days days 2/7 5/8/2017 Assignment Print View Explanation: Some values below may show as rounded for display purposes, though unrounded numbers should be used for the actual calculations. a. Accounts receivable period = Accounts receivable / (Annual sales / 365) = $290 / ($6,800 / 365) = 15.6 days b. Accounts payable period = Accounts payable / (Annual cost of goods sold / 365) = $450 / ($6,000 / 365) = 27.4 days c. Inventory period = Inventory / (Annual cost of goods sold / 365) = $670 / ($6,000 / 365) = 40.8 days d. Cash conversion cycle= Inventory period + Accounts receivable period – Accounts payable period = 40.8 + 15.6 – 27.4 = 28.9 days 3/7 5/8/2017 2. Assignment Print View Award: 5 out of 5.00 points Complete the statement of sources and uses of cash from the following entries: Net income Dividends Additions to inventory Additions to receivables Depreciation Reduction in payables Net issuance of long­term debt Sale of fixed assets $1,900 700 160 190 130 590 340 100 Sources Issued long­term debt Sale of fixed assets Cash from operations: Net income Depreciation Total sources Uses Additions to inventory Increase in accounts receivable Decrease in accounts payable Payment of dividends Total uses 1,900 130 $ 2,470 $ 160 190 590 700 $ 1,640 $ 340 100 References Worksheet Learning Objective: 19­03 Trace a firm’s sources and uses of cash and evaluate its need for short­ term borrowing. Complete the statement of sources and uses of cash from the following entries: Net income Dividends Additions to inventory Additions to receivables Depreciation Reduction in payables Net issuance of long­term debt $1,900 700 160 190 130 590 340 4/7 5/8/2017 Assignment Print View Sale of fixed assets Sources Issued long­term debt Sale of fixed assets Cash from operations: Net income Depreciation Total sources Uses Additions to inventory Increase in accounts receivable Decrease in accounts payable Payment of dividends Total uses 100 $ 340 100 1,900 130 $ 2,470 $ 160 190 590 700 $ 1,640 5/7 5/8/2017 3. Assignment Print View Award: 0 out of 5.00 points Here is a forecast of sales by National Bromide for the first 4 months of 2015 (figures in thousands of dollars): Month: Cash sales Credit sales 1 28 165 2 37 185 3 31 155 4 27 135 On average, 60% of credit sales are paid for in the current month, 20% in the next month, and the remainder in the month after that. What are the expected cash collections in months 3 and 4? (Enter your answers in whole dollars.) Month 3 Month 4 Expected cash collections $ 35 $ 42 References Worksheet Learning Objective: 19­04 Develop a short­term financing plan that meets the firm’s need for cash. Here is a forecast of sales by National Bromide for the first 4 months of 2015 (figures in thousands of dollars): Month: Cash sales Credit sales 1 28 165 2 37 185 3 31 155 4 27 135 On average, 60% of credit sales are paid for in the current month, 20% in the next month, and the remainder in the month after that. What are the expected cash collections in months 3 and 4? (Enter your answers in whole dollars.) Month 3 Month 4 Expected cash collections $ 194,000 ± 0.1% $ 176,000 ± 0.1% Explanation: Monthly collections: Month 3: $31,000 + (.6 × $155,000) + (.2 × $185,000) + (.2 × $165,000) = $194,000 Month 4: $27,000 + (.6 × $135,000) + (.2 × $155,000) + (.2 × $185,000) = $176,000 6/7 5/8/2017 4. Assignment Print View Award: 0 out of 5.00 points A firm sells its $1,100,000 receivables to a factor for $1,078,000. The average collection period is 1 month. What is the effective annual rate on this arrangement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Effective annual rate 12.88 % References Worksheet Learning Objective: 19­05 Identify several major sources of short­ term financing. A firm sells its $1,100,000 receivables to a factor for $1,078,000. The average collection period is 1 month. What is the effective annual rate on this arrangement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Effective annual rate 27.43 ± 1% % Explanation: Some values below may show as rounded for display purposes, though unrounded numbers should be used for actual calculations. The implicit interest rate per period (r) is computed as: $1,078,000 × (1 + r) = $1,100,000 r = .02041, or 2.041% The effective annual rate is determined as: EAR = (1 + r)t – 1 = (1 + .02041)12 – 1 = .2743, or 27.43% 7/7 ...
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