EBK FUNDAMENTALS OF CORPORATE FINANCE
3rd Edition
ISBN: 9780133762808
Author: Harford
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Textbook Question
Chapter 19, Problem 15P
Use the financial statements supplied below and on the next page for International Motor Corporation (IMC) to answer the following questions (see MyFinanceLab for the data in Excel format):
a. Calculate the cash conversion cycle for IMC for both 2015 and 2016. What change has occurred, if any? All else being equal, how does this change affect IMC’s need for cash?
b. IMC’s suppliers offer terms of net 30. Doest it appear that IMC is doing a good job of
International Motor Corporation
Income Statement (in millions)
For the Years Ending December 31
| 2015 | 2016 | |
| Sales | $60,000 | $75,000 |
| Cost of goods sold | 52,000 | 61,000 |
| Gross profit | $8,000 | $14,000 |
| Selling, general and administrative expenses | 6,000 | 8,000 |
| Operating profit | $2,000 | $6,000 |
| Interest expense | 1,400 | 1,300 |
| Earnings before taxes | $600 | $4,700 |
| Taxes | 300 | 2350 |
| Earnings after taxes | $300 | $2,350 |
International Motor Corporation
| 2015 | 2016 | 2015 | 2016 | ||
| Assets | Liabilities | ||||
| Cash | $3,080 | $6,100 | Accounts payable | $3,600 | $4,600 |
| Accounts receivable | 2,800 | 6,900 | Notes payable | 1,180 | 1,250 |
| Inventory | 6,200 | 6,600 | Accruals | 5,600 | 6,211 |
| Total current assets | $12,080 | $19,600 | Total current liabilities | $10,380 | $12,061 |
| Net plant, property, and equipment | $23,087 | $20,098 | Long-term debt | $6,500 | $7,000 |
| Total liabilities | $16,880 | $19,061 | |||
| Total assets | $35,167 | $39,698 | Equity | ||
| Common Stock | $2,735 | $2,735 | |||
| $15,552 | $17,902 | ||||
| Total Equity | $18,287 | $20,637 | |||
| Total liabilities and equity | $35,167 | $39,698 |
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Chapter 19 Solutions
EBK FUNDAMENTALS OF CORPORATE FINANCE
Ch. 19 - Prob. 1CCCh. 19 - Prob. 2CCCh. 19 - Prob. 3CCCh. 19 - Prob. 4CCCh. 19 - Prob. 5CCCh. 19 - Prob. 6CCCh. 19 - Prob. 7CCCh. 19 - Prob. 8CCCh. 19 - Prob. 9CCCh. 19 - Prob. 10CC
Ch. 19 - Prob. 11CCCh. 19 - Prob. 12CCCh. 19 - Prob. 1CTCh. 19 - Prob. 2CTCh. 19 - 3. Does an increase in a firm’s cash cycle...Ch. 19 - Prob. 4CTCh. 19 - Prob. 5CTCh. 19 - Prob. 6CTCh. 19 - Prob. 7CTCh. 19 - Prob. 8CTCh. 19 - Prob. 9CTCh. 19 - Prob. 10CTCh. 19 - Which of the following short-term securities would...Ch. 19 - Prob. 1DCCh. 19 - Prob. 2DCCh. 19 - Prob. 3DCCh. 19 - Prob. 4DCCh. 19 - Prob. 5DCCh. 19 - Prob. 6DCCh. 19 - Prob. 7DCCh. 19 - Prob. 8DCCh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - The Greek Connection had sales of $32 million in...Ch. 19 - Assume the credit terms offered to your firm by...Ch. 19 - Prob. 8PCh. 19 - Prob. 9PCh. 19 - Prob. 10PCh. 19 - Prob. 11PCh. 19 - Prob. 12PCh. 19 - Prob. 13PCh. 19 - Prob. 14PCh. 19 - Use the financial statements supplied below and on...Ch. 19 - Prob. 16PCh. 19 - Prob. 17P
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