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Question - Read the following passage and answer the questions that follow: DIDO (Pvt) Ltd is a data management company operating in Palapye in Botswana. You are the financial manager for this company and the management has requested you to present a paper on short term financial management issues. DIDO (Pvt) Ltd has a permanent funding requirement of P135 000 in operating assets and seasonal funding requirements that vary between P0 and P990 000 and average P101 250. If the company can borrow short term funds at 6.25% and long term funds at 8%, and it can earn 5% on the investment of any surplus balances.
The company has annual sales of P10 million, a cost of goods sold of 75% of sales, and purchases that are 65% of cost of goods sold. The company has an Average Age Inventory of 60 days, an Average Collection Period of 40 days and an Average Payment Period of 35 days.
Required -
a. Calculate the company's cash conversion cycle.
b. Calculate the annual cost of an aggressive strategy for seasonal funding.
c. Calculate the annual cost of a conservative strategy for seasonal funding?
d. Describe any two common techniques of managing inventory.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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