Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 22, Problem 5MC
Summary Introduction
Case summary:
Person R and his brother person J planned to start a business of wholesale building supply.
Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10th day followed by the sale and 50% on the 40th day, and 20% of the customers on 70th day.
Characters in the case:
- Person R
- Person J
To determines: Average daily sales for the 1st quarter and 2nd quarter and for the full half year. And DSO at the end of the March and June. The indication about customers’ payment by DSO and whether DSO is a good management tool in the current case.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Your company forecasts that next year's sales will be $67.00 million and the Days Sales Outstanding (DSO) ratio will be 24.71. What is the forecasted accounts receivable for next year?
Note: your answer should in millions of dollars.
What is the mean return for trading days other than first day of the month?
AMRO Financials is quite certain that interest rates are going to decrease next month. How should the bank manager adjust the bank’s one-month repricing gap to increase the net interest income when interest rates decrease
The bank should set its repricing gap to a positive position. In this case, as rates decrease, interest income will decrease by less than the decrease in interest expense.
The bank should set its repricing gap to a negative position. In this case, as rates decrease, interest expense will decrease by more than the decrease in interest income.
The bank should set its repricing gap to a positive position. In this case, as rates decrease, market value of assets will increase by more than the increase in market value of liabilities.
The bank should set its repricing gap to a negative position. In this case, as rates decrease, market value of assets will increase by more than the increase in market value of liabilities.
Chapter 22 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 22 - Prob. 1QCh. 22 - Prob. 2QCh. 22 - Is it true that if a firm calculates its days...Ch. 22 - Firm A had no credit losses last year, but 1% of...Ch. 22 - Indicate by a (+), (), or (0) whether each of the...Ch. 22 - Cost of Bank Loan On March 1, Minnerly Motors...Ch. 22 - Cost of Bank Loan Mary Jones recently obtained an...Ch. 22 - Del Hawley, owner of Hawleys Hardware, is...Ch. 22 - Gifts Galore Inc. borrowed 1.5 million from...Ch. 22 - Relaxing Collection Efforts The Boyd Corporation...
Ch. 22 - Tightening Credit Terms Kim Mitchell, the new...Ch. 22 - Effective Cost of Short-Term Credit Yonge...Ch. 22 - Monitoring of Receivables
The Russ Fogler Company,...Ch. 22 - Prob. 10PCh. 22 - Prob. 1MCCh. 22 - Prob. 2MCCh. 22 - Prob. 3MCCh. 22 - Prob. 4MCCh. 22 - Prob. 5MCCh. 22 - Prob. 6MCCh. 22 - Prob. 7MCCh. 22 - Assume that it is now July of Year 1 and that the...Ch. 22 - Now assume that it is several years later. The...Ch. 22 - Prob. 10MCCh. 22 - Prob. 11MCCh. 22 - Prob. 12MCCh. 22 - Prob. 13MCCh. 22 - Prob. 14MCCh. 22 - Suppose the firm makes the change but its...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Which of the following is the most correct? A. In reference to the time value of money, the present value is always labeled as t=1 B. Negative MVAs indicate that a company's executives are managing the expenses well C. Nominal rates, or annual percentage rates, always equal the effective annual rate D. A strong ROE always indicates a strong year for a company E. Firms should generally try to minimize their days' sales outstanding in order to access their receivables at fast rates.arrow_forwardAs ABC Corporation's fiscal year end date of December 31 approaches, management is worried that reported earnings will fall short of investors' expectations. Which of the following actions would increase ABC's earnings for the current year? O a. Convince customers to pay outstanding accounts receivable by offering a discount for payments received by December 31. O b. Postpone scheduled year-end maintenance on Acme's machinery until next year. O c. Collect more cash from customers for services that Acme will provide next year. O d. Delay until next year the payment of bonuses that employees have earned this year. 12:00 PM pe here to search 5/5/2021 DELL F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 PrtScr Insert Delete @ # 2$ % & + Backspac 1 3 4 7 8 E R T. Y P. 一 A D F Garrow_forwardAs ABC Corporation's fiscal year end date of December 31 approaches, management is worried that reported earnings will fall short of investors' expectations. Which of the following actions would increase ABC's earnings for the current year? O a. Convince customers to pay outstanding accounts receivable by offering a discount for payments received by December 31. O b. Postpone scheduled year-end maintenance on Acme's machinery until next year. O c. Collect more cash from customers for services that Acme will provide next year. O d. Delay until next year the payment of bonuses that employees have earned this year. 12:02 PM o search 5/5/2021 DELL F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 PrtScr Insert Delete # 2$ & + Backspace 2 4 7 9. %3D { W E R Y U 1arrow_forward
- Data on Shick Inc. for last year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365 day year. Do not round yourData on Shick Inc. for last year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365-day year. Do not round your intermediate calculations. Sales $103, 000 Accounts receivable $16,000 Days Sales Outstanding (DSO) 56.699 Benchmarks' Days Sales Outstanding (DSO) 19.000 a. $9,805 b. $11,471 c. $10, 638 d. $4,529arrow_forwardWhich of the following is the MOST correct? In reference to the time value of money, the present value is always labeled as t=1 Negative MVAs indicate that a company's executives are managing its expenses well nominal rates, or annual percentage rates, are always equal to the effective annual rate A strong ROE always indicates a strong year for the firm A firm should generally seek to minimize their days' sales outstanding values in order to access their receivables at a faster ratearrow_forwardBluewater, Inc. has the following estimated quarterly sales for next year. The accounts receivable period is 60 days. What is the expected accounts receivable balance to the nearest dollar at the end of the third quarter? Assume that each month has 30 days. Q1 Q2 Q3 Q4 Sales $1,850 $1,625 $1,345 $1,200 Question 4 Answer a. $ 448 b. $ 897 c. $ 1,532 d. $ 673 e. $1,485arrow_forward
- Your company forecasts that next year's sales will be $59.00 million, Cost of Goods Sold (COGS) will be 85% of sales, and the Days Payables Outstanding (DPO) ratio will be 22.19. What is the forecasted accounts payable for next year?arrow_forwardBluewater, Inc. has the following estimated quarterly sales for next year. The accounts receivable period is 60 days. What is the expected accounts receivable balance to the nearest dollar at the end of the third quarter? Assume that each month has 30 days. Q2 Q3 Q4 $1,300 $1,425 $2,200 Ⓒa. $800 b. $367 c. $950 d. $733 Qe. $867 Q1 Sales $1,850arrow_forwardMoore Money is a financial services firm specializing in fixed-income investments. You have beenasked by the accounting manager to analyze the company’s financial data from the last quarter. Youfind the firm had return on investment (ROI) of 15% and asset turnover of 0.5. What was the returnon sales (ROS) for the quarter?arrow_forward
- Which of the following would most likely signal that a company may be using aggressiveaccrual accounting policies to shift current expenses to later periods? Over the last fi veyear period, the ratio of cash fl ow to net income has:A . increased each year.B . decreased each year.C . fl uctuated from year to year.arrow_forwardSelect the correct statement: A. In managing the firm's accounts receivable, it is possible to increase credit sales per day yet still keep accounts receivable fairly steady, provided the firm can shorten the length of its collection period sufficiently. B. A firm that makes 90% of its sales on credit and 10% cash is growing at a constant rate of 10% annually. Such a firm will be able to keep its accounts receivable at the current level, since the 10% cash sales can be used to finance the 10% growth rate. C. Ceteris paribus, if a firm can shorten its days of sales outstanding, this will lead to a higher current ratio. E. Answer not givenarrow_forwardUANG Financials is quite certain that interest rates are going to decrease next month. How should the bank manager adjust the bank’s maturity gap to increase its equity value when interest rates decrease ? Group of answer choices The bank should set its maturity gap to a positive position. In this case, as rates decrease, market value of assets will increase by less than the increase in market value of liabilities. The bank should set its maturity gap to a negative position. In this case, as rates decrease, market value of assets will decrease by less than the decrease in market value of liabilities. The bank should set its maturity gap to a negative position. In this case, as rates decrease, market value of assets will decrease by more than the decrease in market value of liabilities. The bank should set its maturity gap to a positive position. In this case, as rates decrease, market value of assets will increase by more than the increase in market value of…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Financial Projections for Startups Basic Walkthrough; Author: Mike Lingle;https://www.youtube.com/watch?v=7avegQF4dxI;License: Standard youtube license