1. Arias has an average age of inventory of 90 days, an average payment period of 30 days and an average collection period of 40 days.What is the firm's operating cycle in terms of days?

1. Babbit, Inc. has an average payment period of 30 days. It has an average collection period of 40 days and an operating cycle of 120 days.How many days long is the firm's average age of inventory?

3. Ko'olau, Inc. bought raw materials on account and then paid for them within 30 days. Ko'olau used the raw materials to make a product that they sold on account 100 days after the purchase of the raw materials. Their customer paid for the finished good 60 days later. How many days long is the firm's cash conversion cycle?

4. Mongolia, Inc has a cash conversion cycle of 175 days. Mongolia can stretch its average payment period to 45 days from 30 days. The result is a/an_________ of ____ days in the cash conversion cycle.

5. Heger Co has an average payment period of 50 days. Its operating cycle is 170 days and its average age of inventory is 145 days. How many days long is the firm's average collection period?

6. Arrowroot, Inc. has an average collection period of 49 days.Its average payment period is 60 days and its average age of inventory is 101 days. What is the firm's inventory turnover?

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4. 7. Rabbithole. held its quarterly dividend meeting on April 19. At that time, the directors of Rabbithole declared a $.50 per share cash dividend to be paid to the holders of record on Monday, May 1.On what day will the firm's stock sell ex-dividend?
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8. Mr. Brown owns 20,000 shares of Lacy Co stock. The company will be issuing a stock dividend. Before the dividend Mr. Brown owned 10% of the outstanding stock which has a market value of $200,000, or $10 per share. After he receives the 10% stock dividend, what is the value of Mr. Brown's shares?

9. Walnut Co held its quarterly dividend meeting on December 8. At that meeting, the directors decided that a $1.50 per share cash dividend would be paid to the holders of record on Monday, January 1. Before the dividend was declared, the firm's cash balance was $30,000 and its accumulated retained earnings balance totaled $1,280,000. Walnut has 10,000 shares of common stock outstanding. What were the balances in the cash, dividends payable, and retained earnings accounts on January 2? (Hint: remember, net income is all first put into Retained Earnings and then dividends are paid out of retained Earnings.)

Use the information below for the next two problems.

Cottontail wants to find out the maximum amount of cash dividends it can pay this year. The company has 250,000 shares outstanding currently. Its balance sheet is shown below:

Assets

Cash $ 412,500 Accounts Receivable 900,000 Fixed Assets 987,500 $2,300,000

Liabilities and Shareholders' Equity Accounts Payable $ 445,000 Long-term Payable 280,000 Common Stock 600,000 Retained earnings 975,000 $2,300,000

10. What is the highest amount of dividends that Cottontail firm could pay from a legal perspective?

11. What is the maximum amount of dividends per share that Cottontail could pay in terms of cash availability?

The following information is for questions 12 and 13. The Liang Company's balance sheet has the following capital section. Liang's stock is currently selling for $5 per share.

Common Stock (50,000 shares at $1 par) $50,000

Capital in Excess of Par 50,000

Retained Earnings 100,000

$200,000

12. Liang plans to declare a 2 for 1 stock split. Show the relevant section of the Balance sheet after this.

13. If Liang declared a 10% stock dividend instead of doing the stock split, what would the relevant section of the balance sheet look like?

14. Macagba Company uses 1,100 units of an particular item each year. Carrying the item in inventory costs $200 per unit per year. It costs $150 for each order of the chemical. Macagba uses the item at a constant rate each year. Calculate the Economic Order Quantity.

15. Use the data from problem 14 and assume that Macagba Company operates 250 days per year. Also assume that its total usage is 1,100 units per year. There is a lead time of 2 days and Macagba desires to keep a safety stock of 4 units.Calculate the reorder point.