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ATIQ, a small global jewellery and crafts marketing company, is beginning to expand into other markets in North America outside of “la Belle Province”. Its financial statements are as follows: ATIQ plans to make monthly outgoings of $2,000 in year N+1, in order to meet its financial commitments. These outgoings are made at a relatively regular rate during the year. It generally invests its liquidity (cash) in treasury bills at an average rate of return of 20%. A transaction to buy or sell treasury bills costs the firm $50. ATIQ has the privilege of being among the first customers served by the supplier. Sales of jewellery and accessories average 120 units annually. The cost of an order is $10 and the cost of holding one unit of jewellery or accessory is $2. What is the optimal quantity to order?

ATIQ, a small global jewellery and crafts marketing company, is beginning to expand into other markets in North America outside of “la Belle Province”. Its financial statements are as follows: ATIQ plans to make monthly outgoings of $2,000 in year N+1, in order to meet its financial commitments. These outgoings are made at a relatively regular rate during the year. It generally invests its liquidity (cash) in treasury bills at an average rate of return of 20%. A transaction to buy or sell treasury bills costs the firm $50. ATIQ has the privilege of being among the first customers served by the supplier. Sales of jewellery and accessories average 120 units annually. The cost of an order is $10 and the cost of holding one unit of jewellery or accessory is $2. What is the optimal quantity to order?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ATIQ, a small global jewellery and crafts marketing company, is beginning to expand into other markets in North America outside of “la Belle Province”.

Its financial statements are as follows:

  1. ATIQ plans to make monthly outgoings of $2,000 in year N+1, in order to meet its financial commitments. These outgoings are made at a relatively regular rate during the year. It generally invests its liquidity (cash) in treasury bills at an average rate of return of 20%. A transaction to buy or sell treasury bills costs the firm $50.
  2. ATIQ has the privilege of being among the first customers served by the supplier. Sales of jewellery and accessories average 120 units annually. The cost of an order is $10 and the cost of holding one unit of jewellery or accessory is $2. What is the optimal quantity to order?
Its financial statements are as follows: 国 ATIQ's year-end review Passif et avoirs des emen Assets N+1 actionnaires N+1 Current liabilities/short term liabilities Current assets/short er du term assets Fournisseurs 7 850 63 670 Clients 12 950 20 640 rme s es cli el est Stock of raw materials and er du finished products 10 000 16 650 Total of Current caisse assets/short term déca assets énér Une t Total ofCurrent liabilities/short term liabilities Liabilities and assets 22 950 37 290 63 670 Fix assets of shareholders Net fixed assets 900 90 000 Long-term liabilities al de Long-term debt 10 000 13 620 er du Shareholder's equity Ordinary share capital/ Common share capital 'être soire $et 50 000 50 000 Retained profits/ Profits not distributed 50 000 Total shareholders' equity ale à 100 000 50 000 rer du Total liabilities and shareholders' equity Total current assets 117 850 127 290 117 850 127 290
Transcribed Image Text:Its financial statements are as follows: 国 ATIQ's year-end review Passif et avoirs des emen Assets N+1 actionnaires N+1 Current liabilities/short term liabilities Current assets/short er du term assets Fournisseurs 7 850 63 670 Clients 12 950 20 640 rme s es cli el est Stock of raw materials and er du finished products 10 000 16 650 Total of Current caisse assets/short term déca assets énér Une t Total ofCurrent liabilities/short term liabilities Liabilities and assets 22 950 37 290 63 670 Fix assets of shareholders Net fixed assets 900 90 000 Long-term liabilities al de Long-term debt 10 000 13 620 er du Shareholder's equity Ordinary share capital/ Common share capital 'être soire $et 50 000 50 000 Retained profits/ Profits not distributed 50 000 Total shareholders' equity ale à 100 000 50 000 rer du Total liabilities and shareholders' equity Total current assets 117 850 127 290 117 850 127 290
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