Fin515 - Week 7 Assignment

16-1 Cash Management Williams & Sons last year reported gross sales of $10 million and an inventory upset ratio of 2. The hostel is flat adopting a new inventory establishment. If the new system is subject to reduce the firms inventory take aim and accession the firms inventory dollar loudness ratio to 5 while maintaining the same level of sales, how such(prenominal) cash leave be freed up? Sales = $10 million, scrutinize 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 numbers $3,500 in book of facts sales each mean solar day. What is the companys average accounts receivable? Credit sales = $3,500, Collection compass superlative = 17 long time Accounts receivable (AR) = Credit Sales per day*duration of collection period AR = $3,500*17 = $59,50 0 16-3 make up of Trade Credit What is the noun phrase and effective monetary take to be of slew realization under the recognise toll of 3/15, net 30? Nominal cost of cope credit (rNOM)= tax deduction 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 one-year rate (EAR) = [(1+ .0309) 24.33] - 1.0 = 2.0968 1.0 = 1.0968 = 109.68% EAR = 109.68% 16-4 Cost of Trade Credit A large retailer obtains merchandise under th! e credit call 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 demoralize 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 hard-hitting annual rate (EAR) = [(1+ 1/99) 8.11] - 1.0 = 1.0849 - 1.0 = .0849 or 8.49% EAR = 8.49%...If you insufficiency to get a full essay, order it on our website: OrderCustomPaper.com

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