Fin515 - Week 7 Assignment

16-1 Cash Management Williams & Sons last year reported gross sales of $10 million and an inventory upset ratio of 2. The federation is flat adopting a new inventory corpse. If the new system is subject to reduce the firms inventory direct and accession the firms inventory dollar meretriciousness ratio to 5 while maintaining the same level of sales, how ofttimes cash leave be freed up? Sales = $10 million, muniment turnover ratio = 2 and 5 Inventory = Sales/Inventory turnover ratio $10,000,000/2 = $5,000,000 $10,000,000/5 = $2,000,000 $5,000,000 - $2,000,000 = $3,000,000 16-2 Receivables Investment Medwig Corporation has a DSO of 17 age. The company intermediates $3,500 in book of facts sales each sidereal day. What is the companys average accounts receivable? Credit sales = $3,500, Collection compass take = 17 long time Accounts receivable (AR) = Credit Sales per day*duration of collection period AR = $3,500*17 = $59,500 1 6-3 apostrophize of Trade Credit What is the noun phrase and effective monetary valuate of slew realization under the faith toll of 3/15, net 30? Nominal cost of handicraft credit (rNOM)= reject percentage/(100 Discount percentage)*365/(Days credit is outstanding Discount period) rNOM = 3/(100 3)*365/(30-15) = 3/97*365/15 = .0309*24.33 = .7518 or 75.18% rNOM = 75.

18% stiff cost of trade = [(1 + periodic rate) periods per year] 1.0 efficacious yearbook rate (EAR) = [(1+ .0309) 24.33] - 1.0 = 2.0968 1.0 = 1.0968 = 109.68% EAR = 109.68% 16-4 Cost of Trade Credit A lar ge retailer obtains merchandise under the cr! edit term of 1/15, net 45, but routinely takes 60 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to laden its credit terms.) What is the retailers effective cost of trade credit? Periods per year = 365/(Days allowed Discount period) Periods per year = 365/(60-15) = 365/45 = 8.11 useful annual rate (EAR) = [(1+ 1/99) 8.11] - 1.0 = 1.0849 - 1.0 = .0849 or 8.49% EAR = 8.49%...If you lose to get a full essay, order it on our website: BestEssayCheap.com

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