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# fm22 5 - 15-30 5 36 97 3 × = 0.0309 × 24.33 = 0.7526 =...

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SOLUTIONS TO END-OF-CHAPTER PROBLEMS 22-1 Sales = \$10,000,000; S/I = 2 × . Inventory = S/2 = 2 000 , 000 , 10 \$ = \$5,000,000. If S/I = 5 × , how much cash is freed up? Inventory = S/5 = 5 000 , 000 , 10 \$ = \$2,000,000. Cash Freed = \$5,000,000 - \$2,000,000 = \$3,000,000. 22-2 DSO = 17; Credit Sales/Day = \$3,500; A/R = ? DSO = S/365 A/R 17 = \$3,500 A/R A/R = 17 × \$3,500 = \$59,500. 22-3 Nominal cost of trade credit =
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Unformatted text preview: 15-30 5 36 97 3 × = 0.0309 × 24.33 = 0.7526 = 75.26%. Effective cost of trade credit = (1.0309) 24.33- 1.0 = 1.0984 = 109.84%. 22-4 Effective cost of trade credit = (1 + 1/99) 8.11- 1.0 = 0.0849 = 8.49%. 22-5 Net purchase price of inventory = \$500,000/day. Credit terms = 2/15, net 40. Answers and Solutions: 22 - 5 \$500,000 × 15 = \$7,500,000....
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