Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 15, Problem 15.14P
a.
Summary Introduction
To determine: The collection float.
b.
Summary Introduction
To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.
c.
Summary Introduction
To determine: The Company’s
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Simon Corporation has daily cash receipts of $70,000. A recent analysis of its collections indicated that customers' payments were in the mail an average of
3.0 days. Once received, the payments are processed in 2.0 days. After payments are deposited, it takes an average of 3.0 days for these receipts to clear the banking system.
a. How much collection float (in days) does the firm currently have?
b. If the firm's opportunity cost of capital is 8%, would it be economically advisable for the firm to pay an annual fee of $14,000 to reduce collection float by 2 days? Explain why or why not.
c. What would the company's opportunity cost have to be to make the $14,000 fee worthwhile?
Route Canal Shipping Company has the following schedule for aging of accounts receivable:
Age of Receivables
April 30, 20X1
(3)
(2)
Age of
Account
0-30
31-60
61-90
91-120
(1)
Month of
Sales
April
March
February
January
Total receivables
Month of Sales
April
March
a. Calculate the percentage of amount due for each month.
February
January
Amounts
$120,540
86,100
103,320
34,440
$344,400
Total receivables
Percent of
Amount Due
%
%
%
do
(4)
Percent of
Amount Due
%
100 %
100%
Suppose that Ken-Z Art Gallery has annual sales of $870,000, cost of goods sold of $560,000, average inventories of $244,500,
average accounts receivable of $265,000, and an average accounts payable balance of $79,000.
Assuming that all of Ken-Z's sales are on credit, what will be the firm's cash cycle? (Use 365 days a year. Do not round intermediate
calculations. Round your final answer to 2 decimal places.)
Chapter 15 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 15.1 - Why is working capital management one of the most...Ch. 15.1 - Prob. 15.2RQCh. 15.1 - Prob. 15.3RQCh. 15.2 - Prob. 15.4RQCh. 15.2 - Prob. 15.5RQCh. 15.2 - What are the benefits, costs, and risks of an...Ch. 15.2 - Prob. 15.7RQCh. 15.3 - Prob. 15.8RQCh. 15.3 - Briefly describe the following techniques for...Ch. 15.3 - Prob. 15.10RQ
Ch. 15.4 - Prob. 15.11RQCh. 15.4 - Prob. 15.12RQCh. 15.4 - What are the basic tradeoffs in a tightening of...Ch. 15.4 - Prob. 15.14RQCh. 15.4 - Prob. 15.15RQCh. 15.4 - Prob. 15.16RQCh. 15.5 - Prob. 15.17RQCh. 15.5 - What are the firms objectives with regard to...Ch. 15.5 - Prob. 15.19RQCh. 15.5 - Prob. 15.20RQCh. 15.5 - Prob. 15.21RQCh. 15 - EOQ analysis Thompson Paint Company uses 60,000...Ch. 15 - Learning Goal 4 ST15- 3 Relaxing credit standards...Ch. 15 - Learning Goal 2 E15-1 Everdeen Inc. has a 90-day...Ch. 15 - Learning Goal 2 E15-2 Icy Treats Inc. is a...Ch. 15 - Prob. 15.3WUECh. 15 - Forrester Fashions has annual credit sales of...Ch. 15 - Prob. 15.1PCh. 15 - Learning Goal 2 P15-2 Changing cash conversion...Ch. 15 - Learning Goal 3 P15-5 EOQ analysis Tiger...Ch. 15 - EOQ, reorder point, and safety stock Alexis...Ch. 15 - Prob. 15.7PCh. 15 - Prob. 15.8PCh. 15 - Prob. 15.9PCh. 15 - Relaxation of credit standards Lewis Enterprises...Ch. 15 - Initiating an early payment discount Gardner...Ch. 15 - Shortening the credit period A firm is...Ch. 15 - Lengthening the credit period Parker Tool is...Ch. 15 - Prob. 15.14PCh. 15 - Prob. 15.15PCh. 15 - Prob. 15.16PCh. 15 - Prob. 15.18P
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