Fin 515 Homework7

16-1 money Management 16-2 Receiv ables investment 16-3 Cost of plenty realization 16-4 Cost of Trade Credit 16-5 Accounts Payable (16-1)Cash Management Williams & Sons populate year reported sales of $10 one thou million and an inventory turnover proportion of 2. The association is at one time adopting a new inventory system. If the new system is able to avoid the mansions inventory level and make up the firms inventory turnover ratio to 5 plot maintaining the same level of sales, how much cash provide be freed up? Inventory = sales / inventory ratio 10,000,000 /2 = 5,000,000 10,000,000/5 = 2,000,000 Frees up 3,000,000 in cash (16-2)Receivables Investment Medwig Corporation has a DSO of 17 age. The company averages $3,500 in source sales each day. What is the companys average accounts due?

17 x 3500 = 59,500 (16-3)Cost of Trade Credit What is the nominal and in effect(p) cost of sight credit to a lower indue the credit call of 3/15, bring in 30? 3/97x365/15=.7526=75.26% (1.0309) 24.33 -1 =1.0984 = 109.84% (16-4)Cost of Trade Credit A large retail merchant obtains merchandise under the credit terms 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 offer its credit terms.) What is the retailers effective cost of trade credit? (1 + 1/99) ^8.11 1.0 = .0849= 8.49%If you want to get a expert essay, order it on our website: OrderEssay.net

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