Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 7, Problem 11DQ
If a firm uses a just-in-time inventory system, what effect is that likely to have on the number and location of suppliers? (LO7-5)
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2. What are some costs associated with high inventories?
3. What is a “supply chain,” and how are supply chains related to just-in-time inventory procedures?
What does a very high inventory turnover ratio signify? Please provide your own example to explain your point.
How should accounting be able to catch up with the high sales return rates, particularly on inventory management?
Chapter 7 Solutions
Foundations of Financial Management
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Why would a financial manager want to slow down...Ch. 7 - Use The Wall Street Journal or some other...Ch. 7 - Why are Treasury bills a favorite place for...Ch. 7 - Explain why the bad debt percentage or any other...Ch. 7 - What are three quantitative measures that can be...Ch. 7 - Prob. 8DQCh. 7 - What does the EOQ formula tell us? What assumption...Ch. 7 - Why might a firm keep a safety stock? What effect...
Ch. 7 - If a firm uses a just-in-time inventory system,...Ch. 7 - City Farm Insurance has collection centers across...Ch. 7 - Prob. 2PCh. 7 - Orbital Communications has operating plants in...Ch. 7 - Postal Express has outlets throughout the world....Ch. 7 - Thompson Wood Products has credit sales of...Ch. 7 - Oral Roberts Dental Supplies has annual sales of...Ch. 7 - Knight Roundtable Co. has annual credit sales of...Ch. 7 - Darla’s Cosmetics has annual credit sales of...Ch. 7 - Barney’s Antique Shop has annual credit sales of...Ch. 7 - Mervyn’s Fine Fashions has an average collection...Ch. 7 - Route Canal Shipping Company has the following...Ch. 7 - Nowlin Pipe & Steel has projected sales of 72,000...Ch. 7 - Fisk Corporation is trying to improve its...Ch. 7 - Prob. 14PCh. 7 - Diagnostic Supplies has expected sales of 84,100...Ch. 7 - Wisconsin Snowmobile Corp. is considering a switch...Ch. 7 - Johnson Electronics is considering extending trade...Ch. 7 - Henderson Office Supply is considering a more...Ch. 7 - Fast Turnstiles Co. is evaluating the extension of...Ch. 7 - Slow Roll Drum Co. is evaluating the extension of...Ch. 7 - Global Services is considering a promotional...Ch. 7 - Problems 22-25 are a series and should be...Ch. 7 - Problems 22-25 are a series and should be...Ch. 7 - Problems 22-25 are a series and should be...Ch. 7 - Problems 22-25 are a series and should be...
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- Which of the following is an advantage of the periodic inventory system?A. frequent physical inventory countsB. cost prohibitiveC. time consumingD. real-time information for managersarrow_forwardWhat is the main difference between a perpetual inventory system and a periodic inventory system? Which system is used more often by major companies?arrow_forwardExplain the purpose of the inventory turnover ratio? Is it possible for a firm to have a high current ratio and still have difficulty paying its current bills? Why or why not?arrow_forward
- a) Compare the periodic versus the perpetual system as a control device. b) What sort of organisations are likely to use the periodic inventory system?What kind of organisations will prefer to use perpetual inventory system?c) If management overstated the valuation of inventory, would it affect profit for the year?arrow_forwardWhy is inventory management especially important for amultinational firm?arrow_forwardWhich of the following statements is NOT true of Economic Order Quantity? O A. The economic order quantity mathematically determines the minimum total inventory cost B. The EOQ is directly proportional to the sales per period O C. The optimal order size is determined by the EOQ model D. The EOQ ignores inventory reorder costs and inventory carrying costsarrow_forward
- Why are perpetual inventory systems more expensive to operate than periodic inventory systems? What conditions justify the additional cost of a perpetual inventory system?arrow_forwardOne reason for inventory is to prevent shutdowns. How does the JIT approach to inventory management deal with this potential problem?arrow_forwardWhich of the following describes the economic order quantity (EOQ)? a. It is associated with a pull inventory system. b. It is the heart of a JIT purchasing system. c. It minimizes total ordering and carrying costs. d. It minimizes stock-out costs.arrow_forward
- When inventory costs rise and inventory quantities are not decreasing, what does the LIFO produces?arrow_forwardHow can accounting keep up with the rising sales return rates, especially when it comes to inventory management?arrow_forwardWhich statements below are true? 1. LCM and LCNRV may be applied by individual products, by product category or by total inventory. 2. A firm that wants to minimize the negative impact of inventory write-down on net income should apply LCM or LCNRV by individual products. 3. If inventory write-down is usual and not substantial, a firm should debit "Loss on inventory write-down” and credit "Inventory". 4. LCM and LCNRV applied by total inventory will result in higher value of inventory and lower inventory write-down than by individual products, by product category. 5. If inventory write-down is unusual and substantial, a firm should debit "Cost of good sold" and credit "Inventory".arrow_forward
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Inventory management; Author: The Finance Storyteller;https://www.youtube.com/watch?v=DZhHSR4_9B4;License: Standard Youtube License