Assignment: Controllership

PART I

Please answer the following questions in paragraph form. Create in a Word document and upload.

1) What is receivables float?

2) What is payables float?

3) Name three ways to shorten the receivables cycle.

4) Give one example of receivables fraud.

5) Name at least two different types of inventory valuation methods. Discuss the advantages and disadvantages of each method.

6) A controller must consider many factors to assist in the determination of capital asset expenditures. Why is this planning important? Name two different accounting methods that might be used in the valuation of the expenditure. Discuss the advantages and disadvantages of both methods.

PART II

Respond to each and then upload your responses.

1) Define at least two common credit agreement provisions (loan covenants).

2) Classify the following as long term or current liabilities: Accounts Payable, Accrued Liabilities, Note Payable with total balance due in 5 years, Mortgage Loan with payments made monthly over 5 years.

3) What are the three components of the cost of capital?

4) Calculate the after tax cost of debt using the following information (hint: see page 285 in text).

A company issues $2 million at 9% interest with a 15% tax rate.
What is the after-tax cost of debt?
Calculate the cost of issuing preferred stock using the same information above.
What is the preferred stock interest cost?
Using the information above, what are the advantages and disadvantages of both methods?

5) What are some reasons a company would chose not to offer cash dividends? What impact might this have on the business operations?