Suppose your firm receives a $5.82 million order on the last day of the year. You fill the order with $1.97 million worth of inventory. The customer picks up the entire order the same day and pays $1.09 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $4.73 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 b. Earnings c. Receivables d. Inventory e. Cash a. Revenues Revenues will ▼ increase or decrease by $___ million. (Select from the drop-down menu and round to two decimal places.)
Suppose your firm receives a $5.82 million order on the last day of the year. You fill the order with $1.97 million worth of inventory. The customer picks up the entire order the same day and pays $1.09 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $4.73 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 b. Earnings c. Receivables d. Inventory e. Cash a. Revenues Revenues will ▼ increase or decrease 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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Question
Suppose your firm receives a $5.82 million order on the last day of the year. You fill the order with $1.97 million worth of inventory. The customer picks up the entire order the same day and pays $1.09 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $4.73 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
b. Earnings
c. Receivables
d. Inventory
e. Cash
a. Revenues
Revenues will
▼
increase or
decrease
by $___ million. (Select from the drop-down menu and round to two decimal places.)
Transcribed Image Text:Suppose your firm receives a $5.82 million order on the last day of the year. You fill the order with $1.97 million worth of inventory. The customer picks up the entire
order the same day and pays $1.09 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $4.73 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
b. Earnings
c. Receivables
d. Inventory
e. Cash
a. Revenues
Revenues will
by $
million. (Select from the drop-down menu and round to two decimal places.)
Expert Solution
Step 1
The sales value is calculated by multiplying the units sold equal to income, which is determined by multiplying the average sales price by the units sold. Receivables, also known as accounts receivable, are consumer debts owed to a business for products or services provided but not yet paid for. The term inventory relates to both raw materials in the manufacture and finished goods that are fully prepared for sale.
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