Suppose your firm receives a $4.34 million order on the last day of the year. You fill the order with $1.82 million worth of inventory. The customer picks up the entire order the same day and pays $1.17 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $3.17 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: a. Revenues d. Inventory e. Cash b. Earnings c. Receivables a. Revenues Revenues will increase by $ million. (Select from the drop-down menu and round to two decimal places.) b. Earnings Earnings will increase by $million. (Select from the drop-down menu and round to two decimal places.) c. Receivables Receivables will increase by $ million. (Select from the drop-down menu and round to two decimal places.)
Suppose your firm receives a $4.34 million order on the last day of the year. You fill the order with $1.82 million worth of inventory. The customer picks up the entire order the same day and pays $1.17 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $3.17 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: a. Revenues d. Inventory e. Cash b. Earnings c. Receivables a. Revenues Revenues will increase by $ million. (Select from the drop-down menu and round to two decimal places.) b. Earnings Earnings will increase by $million. (Select from the drop-down menu and round to two decimal places.) c. Receivables Receivables will increase by $ million. (Select from the drop-down menu and round to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Suppose your firm receives a $4.34 million order on the last day of the year. You fill the order with $1.82 million worth of inventory. The customer picks up the entire order the same day and pays $1.17 million up front in cash; you also issue a bill
for the customer to pay the remaining balance of $3.17 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following:
d. Inventory
e. Cash
a. Revenues
b. Earnings
c. Receivables
a. Revenues
Revenues will increase
by $
million. (Select from the drop-down menu and round to two decimal places.)
b. Earnings
Earnings will increase
by $ million. (Select from the drop-down menu and round to two decimal places.)
c. Receivables
Receivables will increase
by $
million. (Select from the drop-down menu and round to two decimal places.)
d. Inventory
Inventory will decrease by $
million. (Select from the drop-down menu and round to two decimal places.)
е. Cash
Cash will increase by $
million. (Select from the drop-down menu and round to two decimal places.)
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