The CEO of J&B, Ld., would like to propose in the next Council meeting a rise of capital as one of the possible ways to increase the forecast of the working capital for the next financial year and reached 6,000,000 €. This number will allow the company to have a degree of robustness comparable to other competitive companies in the industry. Daily Amount Average Deferments (days) Raw Materials 60.000 10 Salaries 150.000 Overheads 90.000 If the operating cycle is 30 days, what should the manager answer if a director asks him about the average deferment of the overheads?

The CEO of J&B, Ld., would like to propose in the next Council meeting a rise of capital as one of the possible ways to increase the forecast of the working capital for the next financial year and reached 6,000,000 €. This number will allow the company to have a degree of robustness comparable to other competitive companies in the industry. Daily Amount Average Deferments (days) Raw Materials 60.000 10 Salaries 150.000 Overheads 90.000 If the operating cycle is 30 days, what should the manager answer if a director asks him about the average deferment of the overheads?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Suppose that as a financial manager you have collected the following information on your company: Company Financial Information Financial Element Cost Before-tax cost of debt 6.5% Tax rate 40% Total long-term debt $400,000 Cost of preferred stock 7.25% Total preferred stock $50,000 Cost of common stock 11% Total common stock $500,000 Finance utilized $850,000 The firm is considering undertaking a project that costs $250,000 with an expected return of 13.5%. Address the following in your initial post: How much new capital is needed? Not having enough existing capital, how would you recommend going about obtaining the additional funds? Calculate and use the current WACC in your analysis. Discuss how the current WACC will change based on the type of financing chosen.
ABC Limited is in the process of evaluating a project to launch a new category of products at the existing manufacturing facility. There will not be any significant level of Capital investment however, the working capital requirement is expected to increase substantially. You are required to prepare Statement of Estimated Working capital for next 2 years and indicate at least 2 appropriate urces for working capital funding. 1.Sales for the first year is estimated at INR 250 crores and expected to grow at the rate of 20% every year. 2. 90% of the sales is expected to be in Credit 3.Receivables are expected to be at 45 days of sales 4.The purchases are expected to be as follows: a)Raw Materials 40% of the sales b)Other consumables at 20% of sales 5.The credit period enjoyed by the entity for raw materials is 30 day and other consumables are 45 days 6.Finished goods inventory is expected to be valued at 80% of the sales price and period of storage is expected to be 45 days. Raw…
Plz complete using excel showing formula of work !! A project generates 10 years of cash flows. The cash flow for the first year is 100,000. For the remaining years cash flows are projected to grow at a rate of 3%. The required initial investment is $250,000. Assume that the company is 100% equity finance (there is no debt in the capital structure of this company). The risk-free rate of interest of 3% and the expected market risk premium is 7%. If we assume that the beta of the firm is 0.9 when in fact the beta is really 1.5, for how much more or less (in dollars) are we valuing the investment project? Explain in words why the estimation of the value of project assuming a beta of 0.9 is incorrect.
Spellbound Solutions estimated future capital investment needs aré $ 1200m, and the estimated future net income is $1200m. If the company finances itself with 40 percent debt and 60 percent equity, how much in dividends can the company afford to pay? a. $0m b. $420m c. $480m d. $720m e. $900
Operation management
A firm with the following investment opportunities has a capital budget of $10,000. According to the net present value technique, which investments should the firm make if the firm's cost of capital is 10%? Investment A B C Cost $10,000 $7,000 $3,000 Cash Inflow $12,000. $8,600 $4,000
: Assume that the company, where you are working as a team in FinancialDepartment, is considering a potential project with a new product that is expected to sell foran average price of $22 per unit and the company expects it can sell 650 000 unit per year atthis price for a period of 4 years. Launching this project will require purchase of a $3 500 000equipment that has residual value in four years of $500 000 and adding $ 850 000 in workingcapital which is expected to be fully retrieved at the end of the project. Other information isavailable below:Depreciation method: straight lineVariable cost per unit: $17Cash fixed costs per year: $450 000Discount rate: 10%Tax Rate: 30%Do a scenario analysis with cash flows of the assumed project to determine the sensitivity ofthe project’s NPV to different scenarios that are defined in terms of the estimated values foreach of the project’s value drivers. Please work on two scenarios corresponding to the worstand best-case outcomes for the…
Can you help me work out question 1(a) please without having to use excel? Thank you in adv
Revenues generated by a new fad product are forecast as follows: Year Revenues 1 $50,000 2 35,000 3 30,000 4 20,000 Thereafter 0 Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $60,000 in plant and equipment. a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm’s tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. c. If the opportunity cost of capital is 10%, what is the project's NPV? d. What is the project IRR?
Management of BIC Inc, is considering an expansion in the firm’s product line that requires the purchase of €1,000,000in equipment. The expansion is expected to increase the annual cash inflow by €150,000. The cost of capital of the BIC is 10%. Based on the capital budgetingmethods, should management undertake this project?
As assistant to the CFO of Boulder Inc., you must estimate the Year 1 cash flow for a project with the following data. What is the Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number. Sales revenues $11,900 Operating costs $5,430 Tax rate 20.0%
Consider a REIT that holds high quality office buildings in some of the best locations in the US. The REIT is currently traded at a price of $64/share and there are 130 million shares outstanding. Using the information below answer the following questions: Expected next year total revenue: $750M Expected next year total expenses (including interest and depreciation): $380M Expected next year depreciation: $90M Expected next year interest: $70M Total debt: $1.6B Current office CAP in the US: 4.5% to 6.0% depending on quality and location. a. What is your estimation for a fair market value for a share of the REIT described? Show your work! b. What is your estimation for a fair price to pay for a share of the REIT described, if you require a 7.5% rate of return on an unlevered basis and expect the REIT to increase NOI at an average rate of 2.5%? Should you buy shares of that REIT?