Q1. Suppose that LilyMac Photography has annual sales of $228,000, cost of goods sold of $163,000, average inventories of $5.700, average accounts receivable of $27,400 and an average accounts payable balance of $18,400.
Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)
Q2. Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $261,000 but expects the standard deviation in net daily cash flows to be $13,600, the effective annual rate on marketable securities to be 3.1 percent per year, and the trading cost per sale or purchase of marketable securities to be $35.50 per transaction.
What will be its optimal upper cash limit? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)
Q3. HotFoot Shoes would like to maintain its cash account at a minimum level of $26,000, but expects the standard deviation in net daily cash flows to be $4,100, the effective annual rate on marketable securities to be 6.6 percent per year, and the trading cost per sale or purchase of marketable securities to be $210 per transaction.
What will be its optimal cash return point? Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places.)
Q4. Suppose your firm is seeking a three year, amortizing $370,000 loan with annual payments and your bank is offering you the choice between a $383,500 loan with a $13,500 compensating balance and a $370,000 loan without a compensating balance. The interest rate on the $370,000 loan is 9.5 percent
How low would the interest rate on the loan with the compensating balance have to be for you to choose it'? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Q5. Suppose that Ken-Z Art Gallery has annual sales of $890,000, cost of goods sold of $500,000, average inventories of $166,000, average accounts receivable of $135,000, and an average accounts payable balance of $66,00.0.
Assuming that all of Ken-Z's sales are on credit, what will be the firm's cash cycle? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)
Q6. Suppose your firm is seeking a seven-year, amortizing $810,000 loan with annual payments and your bank is 'offering you the choice between a $861,000 loan with a $51,000 compensating balance and a $810,000 loan without a compensating balance. The interest rate on the $81.0,0.00 loan is 8.0 percent
How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Q7. Watkins Resources faces a smooth annual demand for cash of $1.67 million: incurs transaction costs of $68 every time the firm sells marketable securities, and can earn 3.0 percent on its marketable securities.
What will be its optimal cash replenishment level? (Enter your answer in dollars not in millions. Round your answer to 2 decimal places.)
Q8. Suppose a firm has had the following historic sales figures.
| Year: |
2009 |
2010 |
2011 |
2012 |
2013 |
| Sales |
$1,420,000 |
$1,720,000 |
$1,600,000 |
$2,010,000 |
$1,770,000 |
What would be the forecast for next year's sales using regression to estimate a trend?
Q9. Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $6.2 million. The firm also has a profit margin of 25 percent, a retention ratio of 30 percent: and expects sales of $8.2 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments.
| Assets |
Liabilities and Equity |
| Current assets |
$1,736,000 |
Current liabilities $ 1,798,000 |
| Fixed assets |
4,216,000 |
Long-term debt |
1,900,000 |
|
|
Equity |
2,254,000 |
| Total assets |
$5,952,000 |
Total (liabilities and equity |
$5,952,000 |
If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.)
Q10.
Suppose a firm has had the following historic sales figures.
| Year: |
2009 |
2010 |
2011 |
2012 |
2013 |
| Sales |
$2,530,000 |
$3,760,000 |
$4,490,000 |
$5,090,000 |
$5,500,000 |
What would be the forecast for next year's sales using regression to estimate a trend?