ADM 2350 Winter 2008 Revised Assign 4 Solns

ADM 2350 Winter 2008 Revised Assign 4 Solns - Winter 2008...

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Winter 2008 Prof. W. Rentz FINANCIAL MANAGEMENT Revised Assignment #4 Solutions GENERAL INSTRUCTIONS: This assignment is due at the beginning of the lab on Monday, April 7, 2008 for Section Q and at the beginning of the lab on Wednesday, April 9 for Section P. Note that the wrong date appears in the Syllabus for Section P. I was under the impression that Monday, April 7 was the last class for Section P. In fact, there will be class and a lab for Section P on Wednesday, April 9. This assignment counts 5% of your course grade. You are encouraged to work on this assignment in teams of up to 5 students from the same section of this course. Nevertheless , you may turn in an individual assignment if you prefer. Each assignment must be typed and contain the student name(s) and student number(s) on each page. A statement of integrity must be attached to each assignment. Each individual whose name appears on the assignment must sign the statement of integrity. See p. 8 of the course syllabus for the integrity statement. 1. The Kretlow Copper Corporation (KCC) had sales of $6,000,000 last year and earned a 5 percent return, after taxes, on sales. Although its terms of purchase are twenty days, its accounts payable represent 60 days of purchases. Suppliers are threatening to cut off the firm’s purchases. Accordingly, the firm’s president is seeking to increase KCC’s bank borrowings in order for KCC to become current on its trade obligations (i.e. to have 20 days of payables outstanding). KCC’s balance sheet (in thousands of dollars) is Cash $50 Accounts Payable $600 Accounts receivable 250 Note payable 500 Inventories 1,300 Accruals 250 Current assets $1,600 Current liabilities $1,350 500 Mortgage 500 Equipment 500 Common shares 250 Retained earnings 500 Total assets $2,600
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This note was uploaded on 09/13/2011 for the course ADM 2350 taught by Professor Ronda during the Fall '11 term at University of Ottawa.

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ADM 2350 Winter 2008 Revised Assign 4 Solns - Winter 2008...

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