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 8, Problem 11P
McGriff Dog Food Company normally takes 27 days to pay for average daily credit purchases of
a. What is its net credit position? That is, compute its accounts receivable and accounts payable and subtract the latter from the former.
b. If the firm extends its average payment period from 27 days to 37 days (and all else remains the same), what is the firm’s new net credit position? Has it improved its cash flow?
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McGriff Dog Food Company normally takes 30 days to pay for average daily credit purchases of $9,730. Its average daily sales
are $10,010, and it collects accounts in 32 days.
a. What is its net credit position?
Net credit position
b-1. If the firm extends its average payment period from 30 days to 37 days (and all else remains the same), what is the firm's
new net credit position? (Negative amount should be indicated by a minus sign.)
Net credit position
b-2. Has the firm improved its cash flow?
Yes
No
McGriff Dog Food Company normally takes 28 days to pay for average daily credit purchases of $9,540. Its average daily sales are $10,710, and it collects accounts in 32 days.a. What is its net credit position?
b-1. If the firm extends its average payment period from 28 days to 38 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.)
Terry's hardware normally takes 27 days to pay for average daily credit purchases of $9,530. Its average daily sales are $10,680, and it collects accounts in 32 days.
A. What is its net credit position? Compute its account receivable and accounts payable and subtract the latter from the former.
Accounts receivable = Average daily credit sales x Average collection period
Accounts payable = Average daily credit purchases x Average payment period
B. If the firm extends its average payment period from 27 days to 37 days (all else remains the same), what is the firm's new net credit position? Has it improved its cash flow?
Chapter 8 Solutions
Foundations of Financial Management
Ch. 8 - Under what circumstances would it be advisable to...Ch. 8 - Discuss the relative use of credit between large...Ch. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 11DQCh. 8 - Prob. 12DQCh. 8 - Compute the cost of not taking the following cash...Ch. 8 - Regis Clothiers can borrow from its bank at 17...Ch. 8 - Simmons Corp. can borrow from its bank at 17...Ch. 8 - Your bank will lend you $4,000 for 45 days at a...Ch. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Mary Ott is going to borrow $10,400 for 120 days...Ch. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - McGriff Dog Food Company normally takes 27 days to...Ch. 8 - Maxim Air Filters Inc. plans to borrow $300,000...Ch. 8 - Digital Access Inc. needs $400,000 in funds for a...Ch. 8 - Carey Company is borrowing $200,000 for one year...Ch. 8 - Randall Corporation plans to borrow $233,000 for...Ch. 8 - Prob. 16PCh. 8 - Your company plans to borrow $13 million for 12...Ch. 8 - If you borrow $5,300 at $400 interest for one...Ch. 8 - Zerox Copying Company plans to borrow $172,000 ....Ch. 8 - Prob. 20PCh. 8 - Mr. Hugh Warner is a very cautious businessman....Ch. 8 - The Reynolds Corporation buys from its suppliers...Ch. 8 - Prob. 23PCh. 8 - Neveready Flashlights Inc. needs $340,000 to take...Ch. 8 - Harper Engine Company needs $631,000 to take a...Ch. 8 - Summit Record Company is negotiating with two...Ch. 8 - Charming Paper Company sells to the 12 accounts...Ch. 8 - The treasurer for Pittsburgh Iron Works wishes to...
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