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Cash conversion cycle American Products is concerned about managing cash efficiently. On the average, inventories have an age of 90 days, and accounts receivable are collected on 60 days. Accounts payable are paid approximately 30 days after they arise. The firm has annual sales of about $30 million. Cost of goods sold are $20 million, and purchases are $15 million.
a. calculate the firm's operating cycle
b. calculate the firm's cash conversion cycle
c. calculate the amount of resources needed to support the firm's cash conversion cycle.
d. Discuss how management might be able to reduce the cash conversion cycle.
TV’s R Yours is advertising a deal, in which you buy a flat screen TV for $4,769 (including tax) with one year before you need to pay (no interest is incurred if you pay by the end of the one year). How much would you need to deposit at the end of ea..
What consitiutes as Earning Assets? Cash and due from banks, Demand depoits from other FI's, Investments, Federal Funds sold, Loans, Reserve on Loan losses, Premises, repurchase agreements, fixed assets, other assets
Holding company Scully Corporation holds enough stock in company B to give it voting control of both firms. Consider the accompanying simplified balance sheets for these companies. What percentage of the total assets controlled by Scully Corporation ..
Some analysts compare the initial margin on a futures contract to a down payment. Some label it a performance bond. What is the difference between these interpretations?
Compute the future worth’s of the projects at the end of period 7. Assume that the required service period is seven years and that the company is considering a comparable equipment that has an annual lease expense of $10,000 for period seven (to be p..
A child is born this year. On its first birthday [after 1 year], the parents decide to deposit an equal annual contribution to the college fund that will earn 8%, compounded annually. How much should they deposit at the end of each year so that it wi..
The question has us creating a pro forma balance sheet, and one of the criteria is: (5) The firms ending inventory will change directly with the changes in sales in 2016. Does that mean the inventory will (A) decrease by the the amount the sales incr..
Raylan Givens borrows $150,000 to buy a house. The adjustable rate mortgage carries a 1.5 percent rate for the first 3 years. After that the rate will change annually to reflect market conditions. The annual cap is 2% (i.e., the largest increase in a..
Valuate berkshire hathaway (BRK) with two different methods. Use discounted cash flows in conjunction with an appropriate ratio. How does the share price compare to the calculated valuations?
McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $832,500, and $1,215,000 over the next three years. What is the payback period ..
Leverage magnifies losses associated with declines in asset values but not with gains in asset values. This asymmetry is why bank regulators have outlawed leverage by banks that benefit from FDIC insurance.
Calculating Real Returns and Rosk Premiums [LO1] For problem 9, suppose the average inflation rate over this period was 3.5 percent and the average T-bill ate over the period was 4.2 percent. What was the average real return on Crash-n-Burn's stock?
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