April 2008: Section B. Question 3 (b) DST Company has inventory of 90 days, average collection period of 40 days and average payment period of 30 days. i) What is the length of the firm's cash cycle? (3 marks) ii) Determine its cash turnover. (2 marks) iii) If the company's annual sales are RM3 million and 80% of the firm's sales are on credit, calculate the company's accounts receivables. (3 marks) JMD Corporation, which has an annual cash outlay of RM450,000, is determining minimum operating cash holding to avoid unnecessary idle cash. All sales are on 45 days credit and all credit purchases are settled on the 35th day after date of purchase. However its inventories take an average 65 days store holding period before they are sold. Calculate the following: i) The cash cycle. ii) The cash turnover (4 marks) (2 marks) iii) The minimum operating cash. (2 marks) b) Banyak Untung Sdn. Bhd. is planning next year's production. Its budgeted expenses would be RM5 million. The company purchased RM1 million worth of inventory on June 1st by credit. The company will pay the amount at the end of the credit period 2/10 net 40. The company decided to sell the finished goods on September 1st and its credit policy is 5/10 net 30. The customer normally pays on discount basis. (Assume 30 days a month) iv) cash cycle v) cash turnover and (2 marks) vi) minimum operating cash. (2 marks) Explain two (2) motives for holding cash. (2 marks) (4 marks) c)