10th Edition

ISBN: 9780135160619

Author: KEOWN

Publisher: PEARSON

Textbook Question

Chapter 4, Problem 8SP

(Evaluating liquidity) The Tabor Sales Company had a gross profit margin (gross profits ÷ sales) of 30 percent and sales of $9 million last year. Seventy-five percent of the firm’s sales are on credit and the remainder are cash sales. Tabor current assets equal $1.5 million, its current liabilities equal $300,000, and it has $100,000 in cash plus marketable securities.

a. If Tabor’s accounts receivable are $562,500, what is its average collection period?
b. If Tabor reduces its days in receivable (average collection period) to 20 days, what will be its new level of accounts receivable?
c. Tabor’s inventory turnover ratio is 9 times. What is the level of Tabor’s inventories?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 4, Problem 7SP

Chapter 4, Problem 10SP

Students have asked these similar questions

Use the binomial method to determine the value of an American Put option at time t = 0. The option expires at time t = T = 1/2 and has exercise price E = 55. The current value of the underlying is S(0) = 50 with the underlying paying continuous dividends at the rate D = 0.05. The interest rate is r = 0.3. Use a time step of St = 1/6. Consider the case of p = 1/2 and suppose the volatility is σ = 0.3. Perform all calculations using a minimum of 4 decimal places of accuracy. =

Consider a European chooser option with exercise price E₁ and expiry date T₁ where the relevant put and call options, which depend on the value of the same underlying asset S, have the same exercise price E2 and expiry date T₂. Determine, in terms of other elementary options, the value of the chooser option for the special case when T₁ = T2. Clearly define all notation that you use.

The continuous conditional probability density function pc(S, t; S', t') for a risk neutral lognormal random walk is given by Pc(S, t; S', t') = 1 σS'√2π(t' - t) - (log(S/S) (ro²)(t − t)] exp 202 (t't) In the binomial method, the value of the underlying is Sm at time step môt and the value of the underlying at time step (m + 1)St is Sm+1. For this case evaluate Ec[(Sm+1)k|Sm] = [°° (S')*pc(S™, mdt; S', (m + 1)8t)dS' showing all steps, where k is a positive integer with k ≥ 1. You may assume that 1 e (x-n)2 2s2dx = 1 for all real numbers n and s with s > 0.