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In: Finance
A firm is considering several policy changes to increase sales. It will increase the variety of...
A firm is considering several policy changes to increase sales. It will increase the variety of goods it keeps in inventory, but this will increase inventory by $11,500. It will offer more liberal sales terms, but this will result in average receivables increasing by $68,000. These actions are expected to increase sales by $815,000 per year, and cost of goods will remain at 70% of sales. Because of the firm’s increased purchases for its own production needs, average payables will increase by $36,500. What effect will these changes have on the firm’s cash cycle? (Use 365 days in a year. Do not round your intermediate calculations. Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that...
Henderson Office Supply is considering a more liberal credit
policy to increase sales, but expects that 10 percent of the new
accounts will be uncollectible. Collection costs are 5 percent of
new sales, production and selling costs are 79 percent, and the
accounts receivable turnover is five times. Assume income taxes of
30 percent and an increase in sales of $84,000. No other asset
buildup will be required to service the new
accounts.
a. What additional investment in accounts
receivable...
Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that...
Henderson Office Supply is considering a more liberal credit
policy to increase sales, but expects that 10 percent of the new
accounts will be uncollectible. Collection costs are 2 percent of
new sales, production and selling costs are 75 percent, and the
accounts receivable turnover is three times. Assume income taxes of
30 percent and an increase in sales of $66,000. No other asset
buildup will be required to service the new accounts.
a. What additional investment in accounts receivable...
Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that...
Henderson Office Supply is considering a more liberal credit
policy to increase sales, but expects that 6 percent of the new
accounts will be uncollectible. Collection costs are 5 percent of
new sales, production and selling costs are 80 percent, and the
accounts receivable turnover is five times. Assume income taxes of
20 percent and an increase in sales of $74,000. No other asset
buildup will be required to service the new accounts.
a. What additional investment in accounts
receivable...
Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that...
Henderson Office
Supply is considering a more liberal credit policy to increase
sales, but expects that 5 percent of the new accounts will be
uncollectible. Collection costs are 4 percent of new sales,
production and selling costs are 79 percent, and the accounts
receivable turnover is four times. Assume income taxes of 35
percent and an increase in sales of $73,000. No other asset buildup
will be required to service the new accounts.
a. What additional investment in accounts
receivable...
The government is considering the use of a policy to increase the adoption of a beneficial...
The government is considering the use of a policy to increase
the adoption of a beneficial management practice (BMP) that will
have implications for landowners and society. The costs of the BMP
to the landowner is $15,000 right away and $2,000 each subsequent
year starting at the end of year 1. The BMP also generates public
goods and these public benefits are valued at $3,250 per year
starting right away. The public costs of the BMP are estimated to
be...
Your firm wants to increase sales by 12% in 2020. 2019 sales were $1,800,000. The firm...
Your firm wants to increase sales by 12% in 2020. 2019 sales
were $1,800,000. The firm has $4,500,000 in total assets. The firm
has $600,000 in accounts payable on its balance sheet, along with
$250,000 in accruals. The firm has a 6% profit margin, and the firm
typically pays out 10% of its net income. How much of the
additional funds, if any, will be sourced from debt?
Address the following: The text describes several fiscal policy options to stabilize the economy: Changes in...
Address the following:
The text describes several fiscal policy options to stabilize the
economy: Changes in Government Purchases, Business Taxes, Income
Taxes, and Transfer Payments. Based on what you’ve learned so far
in the course, determine if Italy currently needs economic stimulus
or contraction. Describe how each policy option could specifically
be used to change the national economy. Example: Country Z needs
economic stimulus. The government could lower the business tax on
buying new equipment. This would stimulate the economy...
Fahmi Enterprise has a cash-only sales policy. It is considering changing to a credit policy of...
Fahmi Enterprise has a cash-only sales policy. It is considering
changing to a credit policy of net 30 days. Information related to
the current and new policies is given in the table below. The
required rate of return is 0.75 percent per month.
Current Policy
New Policy
Price per unit (RM)
15.00
15.50
Cost per unit (RM)
8.00
8.40
Unit sales per month
2,000
2,050
Perform an analysis to show whether or not Fahmi Enterprise
should adopt the new policy?
A company is considering several alternatives that are shown below. If the firm uses a 10%...
A company is considering several alternatives that are shown
below. If the firm uses a 10% interest rate and uses the rate of
return approach to make the selection, which alternative should be
chosen?
P
Q
R
S
Initial Cost
19,000
16,000
11,000
8,500
Annual Ben.
3,500
3,100
2,200
1,350
Life
10 yrs
10 yrs
10 yrs
10 yrs
Considering recent changes in American culture, how would a critical theorist explain an increase in the...
Considering recent changes in American culture, how would a
critical theorist explain an increase in the juvenile gang
population?
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