financial accountiong A firm currently has a 35-day cash cycle. Assume that thefirm changes its operations such that it decreases itsreceivables period by 4 days, increases its inventory periodby 2 days and decreases its payables period by 3 days. Whatwill the length of the cash cycle be after these changes?How did you calculate the number?

Step 1: Definition of Cash Cycle (Cash Conversion Cycle - CCC)The cash conversion cycle (CCC)…

Answered: A firm currently has a 35-day cash…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 15DQ

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2) What is mark-to-market accounting? a. Hint: Use an example to demonstrate the type of accounting Enron was engaging in. The following sequence of cash flows will be helpful. Assume a 10% discount rate. t = 0 t = 1 4,950.00 t = 2 9,680.00 t = 3 (25,000.00) 16,637.50 First, calculate the accounting income for each year (i.e., use historical cost accounting). Second, calculate the income using Enron's method (i.e., fair value accounting).
When cash flow frequency or compounding frequency (or both) is not annual:a. We are unable to compare the alternatives b. We must annualize all cash flows and compounding frequencies c. We can use the period interest rate, which divides the nominal annual interest rate by the number of interest periods per year d. We must annualize all cash flows and use the nominal annual interest rate.
he conventional payback period ignores the time value of money, and this concerns Cold Goose’s CFO. He has now asked you to compute Sigma’s discounted payback period, assuming the company has a 10% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to two decimal places. For full credit, complete the entire table. (Note: If your answer is negative, be sure to use a minus sign in your answer.) Year 0 Year 1 Year 2 Year 3 Cash flow -$5,000,000 $2,000,000 $4,250,000 $1,750,000 Discounted cash flow Cumulative discounted cash flow Discounted payback period: years Which version of a project’s payback period should the CFO use when evaluating Project Sigma, given its theoretical superiority? The discounted payback period The regular payback period One…
Alderson Metals is compiling a cash balance projection by quarter for next year. Which one of the following adjustments to this projection will decrease the cumulative surplus? A. Reducing payroll costs from its current projection amount B. Decreasing the accounts receivable period by changing the firm's credit policy effective the first of next year C. Receiving more favorable credit terms from the firm's suppliers D. Increasing the dividend per share on the firm's outstanding common stock E. Refinancing the firm's long-term debt at a lower interest rate
what will be the predicted monthly cash deficits and surpluses, and how much short - term financing will the company need in the coming year? what can be inferred from the pattern of cash deficits and surpluses, and the pattern of requirements for short-term financing?
The conventional payback period ignores the time value of money, and this concerns Cute Camel's CFO. He has now asked you to compute Sigma's discounted payback period, assuming the company has a 9% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to two decimal places. For full credit, complete the entire table. (Note: If your answer is negative, be sure to use a minus sign in your answer.) Cash flow Discounted cash flow Cumulative discounted cash flow Discounted payback period: S $ O The regular payback period O The discounted payback period Year 0 -$5,000,000 years $4,928,461 O $3,186,183 O $1,763,323 O $1,351,321 Year 1 $2,000,000 Year 2 $4,250,000 $ Which version of a project's payback period should the CFO use when evaluating Project Sigma, given its theoretical superiority? Year 3 $1,750,000 One theoretical disadvantage of both payback…
The conventional payback period ignores the time value of money, and this concerns Cute Camel’s CFO. He has now asked you to compute Delta’s discounted payback period, assuming the company has a 7% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to two decimal places. For full credit, complete the entire table. (Note: If your answer is negative, be sure to use a minus sign in your answer.) Year 0 Year 1 Year 2 Year 3 Cash flow -$5,000,000 $2,000,000 $4,250,000 $1,750,000 Discounted cash flow Cumulative discounted cash flow Discounted payback period: years
Smith Company has the following annual cash flows: Year 0: –173,160 Year 1: 614,718 Year 2: –726,406 Year 3: 285,714 Which discount rate provides a positive net present value (NPV) given this information?
[Question 6 Which one of the followingsituations will decrease the cash cycle as all elseheld constant?Select one:rateA. Decreasing the accounts payable periodB. Increasing the accounts receivable turnoverC. Increasing the inventory periodD. Decreasing the inventory turnover rate
Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %10. Cash Flow Year 0 1 2 3 4 5 6 7 Select one: a.0.245007 b.0.19667 c.0.168017 d.0.204146 e.0.274516 f.0.181262 g.0.228861 h.0.264278 -3000 3000 6000 -1000 2000 4000 -5000 8000
a) What is the optimal transaction size? b) What should be Rosal's average cash balance? c) What is the total cost?
In the case of decrease the operating cash cycle, which one of the following actions should be taken? A Delay payments to suppliers B Increase the inventory level while maintaining constant salesC Increase the period of time for which credit is granted to customers D Decrease the rate at which the average inventory is sold

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