Chapter 12

Step 1: Find Cash Receipts: March Sales 421,403(40%)+ Feb Sales 379,000(50%)+Jan Sales 352,000(10%) *the remaining of 40% and 50% is 10%=393,261 Cash March Step 2: Calculate Net Cash Inflows for March Cash March: 393,261 Cash Expense March -94,000 Tax,int,div March -41,000 Capital expen March -25,000 = -6,738,80 Net cash inflow March.

All sales are credit sales with 40% collected in the month of sale, 50% collected the following month, and the remainder collected in the second month after the sale. Credit purchases are paid in 30 days and all other items require immediate payment. Compute the net cash inflow for March.

Cash Balance= Beginning cash+A/R-Paid Supplier-Cash Expense: 4,148+1,886-1,892-500=3,642 don't include credit sales.

Carlisle Transport had $4,148 cash at the beginning of the period. During the period, the firm collected $1,886 in receivables, paid $1,892 to supplier, had credit sales of $5,315, and incurred cash expenses of $500. What was the cash balance at the end of the period?

EOQ=√(2)(Reordering cost per order)(unit sales per period)/carrying cost per unit. "fixed cost":reordering cost per unit "forecast inventory":unit sales per period "carrying cost": carrying cost EOQ: √(2)(51)(2,000)/150 insert to calculator =36.8=37

Davis Supply maintains an average inventory of 2,000 dinosaur skulls for sale to filmmakers. The carrying cost per skull per year is estimated to be $150.00 and the fixed order cost is $51. What is the economic order quantity (EOQ)? (Round to the nearest whole number.)

Optimal average number= EOQ/2 Step 1: Find EOQ=√(2)(Reordering cost per order)(unit sales per period)/carrying cost per unit. "fixed cost or ordering costs ":reordering cost per unit "forecast inventory":unit sales per period "carrying cost": carrying cost EOQ=√(2)(5.04)(130,476)/3.35=626.575169 Optimal average number= EOQ/2=626.575169/2=313.2= 313

Hammond Supplies expects sales of 130,476 units per year with carrying costs of $3.35 per unit and ordering cost of $5.04 per order. Assuming the level of inventory is stable, what is the optimal average number of units in inventory? Round to the nearest whole number.

Cash Cycle (in days)=Inventory period + Receivables period -Payable Period Step 1: Find inventory turnover= cogs/inventory= 3,774,840/529,104=7.134401 Step 2: Find Inventory Period=365/receivables turnover= 365/7.134401=51.160567 Step 3: Find Receivables turnover= sales/receivables=5,044,741/492,583=10.241403 Step 3: Find Receivables Period= 365/receivables turnover=365/10.241403=35.639648 Step 4: Find Averagae A/P=(beg+end)/2=(466,588+441,483)/2=454,035.5 Step 5: Find Payable turnover=cogs/average ap=3,774,840/454,035.5=8.313975 Step 6: Find Payable Period= 365/payable turnover=365/8.313975=43.901984 Step 7: Find Cash Cycle=Inventory period + Receivable period - Payable period= 51.160567+35.639648- 43.901984=42.898=42.90

Libscomb Technologies' annual sales are $5,044,741 and all sales are made on credit, it purchases $3,774,840 of materials each year (and this is its cost of goods sold). Libscomb also has $529,104 of inventory, $492,583 of accounts receivable, and beginning and ending of year $466,588 and $441,483 accounts payables (respectively). Assume a 365 day year. What is Libscomb's Cash Cycle (in days)?

Inventory Period(in days)?=365/ Inventory turnover Step 1: Find Inventory Turnover: Cogs/inventory: 3,375,913/522,548=6.460484 Step 2: Find Inventory Period: 365/inventory period: 365/6.460484=56.49=56.5 one decimal place.

Libscomb Technologies' annual sales are $5,654,461 and all sales are made on credit, it purchases $3,375,913 of materials each year (and this is its cost of goods sold). Libscomb also has $522,548 of inventory, $477,647 of accounts receivable, and $425,688 of accounts payable. Assume a 365 day year. What is Libscomb's Inventory Period (in days)?

Inventory turnover=cost of goods sold "material" /inventory Step 1: 3,455,377/589,462= 5.861=5.86 two decimal places

Libscomb Technologies' annual sales are $5,790,246 and all sales are made on credit, it purchases $3,455,377 of materials each year (and this is its cost of goods sold). Libscomb also has $589,462 of inventory, $521,514 of accounts receivable, and $485,581 of accounts payable. Assume a 365 day year. What is Libscomb's Inventory Turnover?

Operating cycle=Inventory Period + Accounts receivables Period Step 1: Find Inventory Turnover= cogs/inventory=3,587,171/500,998=7.160051 Step 2: Find Inventory Period= 365/inventory turnover= 365/7.160051=50.977291 Step 2: Find Receivables Turnover= sales/receivables 5,830,127/548,292=10.633252 Step 3: Find Receivables Period= 365/receivables turnover 365/10.633252=34.326281 Step 4: Find Operating Cycle= Inventory period + Receivables period= 50.977291+34.326281=85.30 two decimal places

Libscomb Technologies' annual sales are $5,830,127 and all sales are made on credit, it purchases $3,587,171 of materials each year (and this is its cost of goods sold). Libscomb also has $500,998 of inventory, $548,292 of accounts receivable, and $469,136 of accounts payable. Assume a 365 day year. What is Libscomb's Operating Cycle (in days)?

Receivables Turnover=Sales/Accounts Receivables Step 1: sales/AR: 6,234,670/513,399=12.14 two decimal places

Libscomb Technologies' annual sales are $6,234,670 and all sales are made on credit, it purchases $3,299,619 of materials each year (and this is its cost of goods sold). Libscomb also has $597,625 of inventory, $513,399 of accounts receivable, and $431,570 of accounts payable. Assume a 365 day year. What is Libscomb's Receivables Turnover?

Receivables period= 365/ Receivables Turnover Step 1: Find Receivables Turnover: sales/accounts receivables 6,816,352/1,475,000=4.621256 Step 2: Find Receivables Period: 365/receivables turnover=365/4.621256=78.982=78.98 two decimal places.

Libscomb Technologies' annual sales are $6,816,352 and all sales are made on credit, it purchases $3,398,843 of materials each year (and this is its cost of goods sold). Libscomb also has $585,474 of inventory, $1,475,000 of accounts receivable, and $1,400,000 of accounts payable. Assume a 365 day year. What is Libscomb's Receivables Period (in days)?

Nominal Rate=(discount/1-discount) * (365/discount period) (0.04/1-0.04)*(365/30) (0.04/0.96)*(365/30)= 0.5069*100 to conver it to percentage=50.69

Mahrouq Technologies buys $16,069,272 of materials (net of discounts) on terms of 4/30, net 60, and it currently pays within 30 days and takes discounts. Mahrouq plans to expand, and this will require additional financing. If Mahrouq decides to forego discounts and thus to obtain additional credit from its suppliers, calculate the nominal cost of that credit. Answer in % terms to 2 decimal places (no % sign).

Effective Rate=(1+discount/1-discount)^(365/discount period)-1 4/10, net 60. the 4 is discount, 10 is discount period. (1+0.04/1-0.04)^(365/10)-1 (1+0.04/0.96)^(365/10)-1 put all of this in calculator 3.4371*100=343.71

Mavericks Cosmetics buys $4,479,954 of product (net of discounts) on terms of 4/10, net 60, and it currently pays on the 10th day and takes discounts. Mavericks plans to expand, and this will require additional financing. If Mavericks decides to forego discounts, what would the effective percentage cost of its trade credit be, based on a 365-day year? Answer in % terms to 2 decimal places.