Reference no: EM132540388
Problem 1 - A firm has arranged for a lockbox system to reduce collection time of accounts receivable. Currently the firm has an average collection period of 43 days, an average age of inventory of 50 days, and an average payment period of 10 days. The lockbox system will reduce the average collection period by three days by reducing processing, mail, and clearing float. The firm has total annual outlays of $15,000,000 and currently pays 9 percent for its negotiated financing.
(a) Calculate the cash conversion cycle before and after the lockbox system.
(b) Calculate the savings in financing costs from the lockbox system.
Problem 2 - A firm has arranged for a lockbox system to reduce collection time of accounts receivable. Currently the firm has an average collection period of 43 days, an average age of inventory of 50 days, and an average payment period of 10 days. The lockbox system will reduce the average collection period by 3 days by reducing processing, mail, and clearing float. The firm's cash conversion cycle
A) Increases by 3 days.
B) Decreases by 3 days.
C) Will not change.
D) Is 93 days.
Problem 3 - AA Inc. has a total annual cash requirement of P9,075,000 which are to be paid uniformly. AA has the opportunity to invest the money at 24% per annum. The Company spends, on the average, P40 for every cash conversion on marketable securities.
1. What is the optimal cash conversion size?
2. How much is the total cost the Company will incur?
Problem 4 - BB Co. has received proposals from several banks to establish a lockbox system to speed up receipts. BB receives an average of 700 checks per day averaging P1,800 each, and its cost of short term funds is 7% per year. Assuming that all proposals will produce equivalent processing results and using a 360-day year, which one of the following proposals is optimal for BB?
A. A P0.50 fee per check?
B. A fee of 0.03% of the amount collected.
C. A flat fee of P125,000 per year
D. A compensating balance of P1,750,000
Problem 5 - CC Corp estimates its total annual cash disbursements of P3,251,250 which are to be paid uniformly. CC has the opportunity to invest the money at 9% per annum. The Company spends, on the average, P25 for every cash conversion to marketable securities and vice versa.
1. What is the optimal cash conversion size?
2. How much is the total cost the Company will incur?
|
Find the present value of cash flows
: You have accumulated some money for your retirement. You are going to withdraw $63,260 every year at the end of the year for the next 19 years.
|
|
Nike triple double and allbirds supply chain strategy
: Using Nike as an example, what are some of the main "challenges" for achieving a successful supply chain transformation?
|
|
Calculate savings in financing costs from lockbox system
: A firm has arranged for a lockbox system to reduce collection time of accounts receivable. Calculate savings in financing costs from lockbox system
|
|
Character traits would you consider critical for success
: What character traits would you consider critical for success? What skills and competencies would you consider essential for success?
|
|
What is the optimal cash conversion size
: CC Corp estimates its total annual cash disbursements of P3,251,250 which are to be paid uniformly. What is the optimal cash conversion size
|
|
What obligations does the united states
: What obligations does the United States have, as a democratic nation concerned with guaranteeing equal opportunities for all its citizens,
|
|
Compute the second-year depreciation
: Computer equipment was acquired at the beginning of the year at a cost of $51,519. Compute the second-year depreciation using the straight-line method
|
|
What is the amount of the gain or loss on disposal
: A fixed asset with a cost of $25,785 and accumulated depreciation of $23,206.50 is sold for $4,383.45. What is the amount of the gain or loss on disposal
|
|
How much would come from products x and y
: Calculate the weighted average contribution margin.Determine the level of sales (in dollars) necessary to generate operating income of $185,000
|