FIN222 week 10 tutorial work PDF

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FIN222 week 10 tutorial work

RQ. 2 A) The operating cycle is basically the avg. length of the time between when the firm gets the inventory and when they get the cash back for all the sales made from selling the product, and as far we go the cash cycle means that it is a measurement which shows us length between when the firm pays cash so that they can purchase the inventory and when it gets the money from the sales made of the inventory which was turned into a product.

RQ. 2 B) When the inventory increases it means that cash cycle period has increased which will lead to increase in the days of when will they purchase inventory, until the cash is received for the sale of the products.

RQ. 2 C) Incase discounts are taken from the suppliers it can cause the payment period falling and effecting the cash cycle days to be reduced.

P1) Operating cycle = Inventory days + AR days = 50+30 = 80 days.

P2) CCC= inventory days + AR days – a/p days = 75 + 30 – 90= 15 days.

P3) Inventory days = inventory/cogs/365 = 15000/80000/365= 68.44 days AR days = AR/sales/365 = 30000/100000/365 = 109.5 days

A/P days = AP/COGS/365 = 40000/80000/365 = 182.5 days CCC= inventory days + AR days – a/p days = 68.44 + 109.5 – 182.5 = -4.56 days.

P6) A) Net working capital =$ CA -$CL = 7250- 3720 = $3530

P6) B) Inventory days = inventory/cogs/365 = 1300000/20000000/365 =23.73 days

AR days = AR/sales/365 = 3950000/32000000/365= 45.05 days

A/P days = AP/COGS/365 = 1500000/20000000/365= 27.38 days. CCC= inventory days + AR days – a/p days= 23.73 + 45.05 – 27.38 = 41.4 days

P6) C) CCC= inventory days + AR days – a/p days= 23.73 + 30 – 27.38 = 26.35 days. P7) 30-5 = 25 DAYS, INTEREST PERIOD IN A YEAR = 3/97 = 3.09%, EAR = (1+0.0309)14.6-1

= 55.94%

P12.

Day outstanding

Amount owed

% of AR

0-15

68000

19.3%

16-30

75000

21.3%

31-45

92000

26.2%

46-60

82000

23.2%

Over 60

36000

10.2%

total

353000

100%

The 36000 AR is over 60 days. P13. Period 15 days and Interest are = 1/99=1.01%

Ear = (1+ APR/m)m -1 = ( 1+ 0.0101)365/15 – 1 = 27%

In my opinion Simon should take the loan from the bank so that he can take advantage of the discount available. P14) A) 40*3%= 1.2

40-1.2= 38.8 APR = 1.2/38.8=3/97 Ear = (1+ APR/m)m -1 = ( 1+ 3/97)365/25 -1 = 56.0% P14) B) Ear = (1+ APR/m)m -1 = ( 1+ 3/97)365/35 -1 = 37.39%.

P15) A) for 2015 Inventory days = 6600/(52000/365) = 43.52 days AR days = 2800/(60000/365) = 17.03 days AP days = 3600/(52000/365) = 25.27 days CCC = 43.52+17.03+25.27 = 35.28 days

P15) B) for 2016 Inventory days = 6600/(61000/365) = 39.49 days AR days = 6900/(75000/365) = 33.58 days AP days = 4600/(61000/365) = 27.52 days CCC = 39.49+33.58+27.52 = 45.55 days P17) A) Inventory days = 2000000/(8000000/365) = 91.25 days P17) B) Inventory days = x/(8000000/365) x = $1600000...