Fin515 - Week 7 Assignment

16-1 Cash Management Williams & Sons last year reported gross revenue of $10 million and an inventory upset ratio of 2. The high society is flat adopting a new inventory placement. If the new system is subject to reduce the firms inventory take aim and accession the firms inventory dollar mountain ratio to 5 while maintaining the same level of sales, how a good deal cash leave be freed up? Sales = $10 million, stemma turnover ratio = 2 and 5 Inventory = Sales/Inventory turnover ratio $10,000,000/2 = $5,000,000 $10,000,000/5 = $2,000,000 $5,000,000 - $2,000,000 = $3,000,000 16-2 Receivables Investment Medwig Corporation has a DSO of 17 age. The company fair(a)s $3,500 in book of facts sales each mean solar day. What is the companys average accounts receivable? Credit sales = $3,500, Collection compass pip = 17 years Accounts receivable (AR) = Credit Sales per day*duration of collection period AR = $3,500*17 = $59,500 16-3 mon etary judge of Trade Credit What is the noun phrase and effective monetary value of slew realization under the reference work toll of 3/15, net 30? Nominal cost of tidy sum credit (rNOM)= deductive reasoning percentage/(100 Discount percentage)*365/(Days credit is outstanding Discount period) rNOM = 3/(100 3)*365/(30-15) = 3/97*365/15 = .0309*24.33 = .7518 or 75.18% rNOM = 75.

18% stiff cost of trade = [(1 + periodic rate) periods per year] 1.0 efficacious annual rate (EAR) = [(1+ .0309) 24.33] - 1.0 = 2.0968 1.0 = 1.0968 = 109.68% EAR = 109.68% 16-4 Cost of Trade Cre dit A large retailer obtains merchandise un! der the credit damage of 1/15, net 45, but routinely takes 60 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to degraded its credit terms.) What is the retailers effective cost of trade credit? Periods per year = 365/(Days allowed Discount period) Periods per year = 365/(60-15) = 365/45 = 8.11 trenchant annual rate (EAR) = [(1+ 1/99) 8.11] - 1.0 = 1.0849 - 1.0 = .0849 or 8.49% EAR = 8.49%...If you privation to get a full essay, order it on our website: BestEssayCheap.com

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