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Questions - Current Liabilities Management
Q1. FP Co. buys on terms 2/10, net 30, but generally does not pay until the 40 days after invoice date. Its purchases total P2,160,000 per year. Assuming 360 days a year, the amount of "non-free" trade credit used by the firm on the average each year is?
Q2. Slipshod Machine Tool Co. owes P40,000 to one of its suppliers. The supplier has offered a trade discount of 2/10 net 30. Slipshod can borrow the funds from either of two banks: First City Bank will loan the funds for 20 days at a cost of P400; Upstart Bank offers a discounted loan for 20 days at a cost of P320.
a. What is the cost of failing to take the discount?
b. What is the effective interest rate on each of the loans?
c. Should Slipshod take the cash discount?
d. Which bank loan should Slipshod use?
David Lee Manufacturing Co. is currently all-equity financed, has an EBIT of $2 million. Compare to David total cash flow if the firm remains unlevered.
Airfoil Castings Inc. casts blades for turbine engines. Within the Casting Department, alloy is first melted in a crucible, then poured into molds to produce the castings. On March 1, there were 190 pounds of alloy in process, which were 60% complete..
What are the benefits and challenges of Enterprise Resource Planning. As an enormous international candy-maker, Nestle SA headquartered in Konicki Switzerland
On the first dy of its fiscal year, Pedro Dynamite Co. issued $11,000,000 of the five-year, 9% bonds, semiannually. The bonds were issued at an effective rate of 12%, and received proceeds cash of $9,785,645. What would the second semiannual interest..
He does know the add-on interest rate was 4.5% and the loan required a total of 36 monthly payments of $314.55 each. How much Elon borrowed?
GG company was organized on January 1, 2020, 50,000 shares of P50 par value common. Prepare a statement of financial position on December 31, 2020.
Firm OCS sold business equipment with a $20,000 initial cost basis and $7,315 accumulated tax depreciation. In each of the following cases, compute OCS’s recaptured ordinary income and Section 1231 gain or loss on sale. (Leave no cell blank. Enter "0..
acc 422- Prepare the December 31 entry assuming it is probable that Sarasota will be liable for $954,500 as a result of this suit. Prepare the journal entries to record the $24,000 expenditure and 2019 amortization.
Calculate the value of each investment based on the required rate of return. Which investment would you recommend and why? Research on the current trends and future prospects on each of the industries and include a summary
Cheryl Colby, CFO of Charming Florist Ltd., has created the firm’s pro forma balance sheet for the next fiscal year. Sales are projected to grow by 10 percent to $462 million. Current assets, fixed assets, and short-term debt are 15 percent, 70 perce..
Your firm purchased machinery with a 7-year MACRS life for $10 million. The project, however, will end after 5 years. If the equipment can be sold for $4 million at the completion of the project, and your firm’s tax rate is 35 percent, what is the af..
Prepare a balance sheet and income statement for Belmond, Inc. Buildings and Equipment $123,500. Accumulated Depreciation $34,000
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