Fin 650, Chapter 16
16-6 Snider Industries sells on stipulations of 2/10, net 45. Whole sales for the year are $1,500,000. Thirty percent of customers pay on the 10th day and capture discounts; the other 70% pay, on mediocre, 50 days succeeding their purchases.
a. What is the days sales unappropriated?
b. What is the mediocre whole of receivables?
c. What would occur to mediocre receivables if Snider toughened its assemblage system retrogression the end that all nondiscount customers paid on the 45th day?
(16-10) The D.J. Masson Corporation needs to train $500,000 for 1 year to contribute instituted high to a new treasury. Masson buys from its suppliers on stipulations of 3/10, net 90, and it popularly pays on the 10th day and captures discounts. However, it could forgo the discounts, pay on the 90th day, and thereby achieve the needed $500,000 in the create of sumptuous occupation belief.
What is the powerful annual share rebuke of this occupation belief?
(16-11) Negus Enterprises has an register transformation end of 50 days, an mediocre assemblage end of 35 days, and a payables deferral end of 25 days. Assume that absorb of commodities sold is 80% of sales.
a. What is the diffusiveness of the robust’s money transformation cycle?
b. If Negus’s annual sales are $4,380,000 and all sales are on belief, what is the robust’s siege in accounts receivable?
c. How multifarious times per year does Negus Enterprises decline aggravate its register?
(16-12) Strickler Technology is accordingly changes in its instituted high policies to mend its money progress cycle. Strickler’s sales conclusive year were $3,250,000 (all on belief), and its net gain edge was 7%. Its register declineaggravate was 6.0 times during the year, and its DSO was 41 days. Its annual absorb of commodities sold was $1,800,000. The robust had urban goods wholeing $535,000. Strickler’s payables deferral end is 45 days.
a. Estimate Strickler’s money transformation cycle.
b. Assuming Strickler holds negligible wholes of money and commercial securities, estimate its whole goods declineaggravate and ROA.
c. Suppose Strickler’s managers venerate the annual register declineaggravate can be traind to 9 times retrogressionout important sales.What would Strickler’s money transformation cycle, whole goods declineover, and ROA bear been if the register declineaggravate had been 9 for the year?
(16-16) The Thompson Corporation projects an growth in sales from $1.5 darling to $2 darling, but it needs an joined $300,000 of popular goods to maintenance this comment. Thompson can finance the comment by no longer importation discounts, thus increasing accounts payable. Thompson purchases below stipulations of 2/10, net 30, but it can retrogression cancelment for an joined 35 days—paying in 65 days and thus beseeming 35 days past due—externally apenalty accordingly its suppliers popularly bear increase size. What is the powerful, or equipollent, annual absorb of the occupation belief?
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