Current Asset Management 2

Current Asset Management 2 - The firm desires to maintain a...

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Old Exam Questions - Current Asset Management Page 2 of 12 Pages 4. Your company is constructing a monthly cash budget for the month of October, November, and December. You have been given the following data: It is currently the end of September (beginning of October). Actual sales were $100 in August and $200 in September. Forecasted sales are $300 for October, $300 for November and $200 for December. Collections of sales are 10 percent in the month of sale, 65 percent the month after sale, and 20% two months after sale. Monthly expenses include salaries-$10; lease-$5; depreciaiton-$5, miscellaneous- $5; and a tax payment of $75 in December. Purchases and wages are equal to 50 percent of the current month's sales, but are paid for in the month after they are incurred. Starting cash balances at the beginning of October are $50.
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Unformatted text preview: The firm desires to maintain a minimum cash balance of $100. How much excess cash (or loans) will the firm have at the end of November? A. $100 B. $105 C. $110 D. $115 E. $120 5. A company believes that it will need to order 100,000 units of inventory over the coming year. The current price per unit of inventory is $3 per unit. Fixed ordering charges for inventory are $150 per order and carrying costs for inventory are equal to 10 percent of the average value (price) of the inventory carried. As you can calculate, the optimal order quantity is: YOU ARE GIVEN THE FOLLOWING INFORMATION FOR PROBLEMS 6 - 7: Income Statement Year 0 Year 1 Sales 12,600.00 13,320.00 Variable Costs -10,080.00 Gross Profit 2,520.00 Fixed Costs -1,108.00 Bad Debt Expense: Original -252.00-252.00 New ---EBIT 1,160.00 Interest: Original -200.00-200.00 New ---EBT 960.00...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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