Case 1. (25 points) The ShireLodge provides a residential convention service in England's Yorkshire Dales. The lodge's general manager is concerned about cash flow in the next few months particularly as insurance will soon be due for payment. The following revenue and expense estimates have been developed for the first four months of 2021. January 10.000 February 12.000 March 13.000 April 14.000 Convention sales revenue Fixed costs: Salaries Ground maintenance Insurance 4.000 500 420 4.000 500 420 4.000 500 420 4.000 500 420 It has been estimated that sales in December 2020 will be 8,000. Previous cash collections indicate that 10 per cent of all ales are collected in the month prior to the sale as a deposit. Then, 50 per cent of all sales are collected in the month of the sale, and 40 per cent of sales are collected in the month following the sale. Variable costs are 15 per cent of revenue. Ninety per cent of variable costs are paid in the month of the sale to which they relate, and the remainder 10 per cent are paid in the month prior to the sale (purchase of some food and other items in preparation for conventions). Salary and ground maintenance fixed cost are paid for as they are incurred. Insurance is paid for twice year, in January and July. It is estimated that on 1st January 2021 the lodge will have 4.200 in its bank account, Prepare a cash budget showing receipts, payments, and opening and closing cash balances for each of the first three months of 2021. Case 4. (25 points) Ohio Valley Homecare Suppliers, Inc. (OVHS), had $20 million in sales in 2009. Its cost of goods sold was $8 million, and its average inventory balance was $2,000,000. a. Calculate the average number of inventory days outstanding for OVHS. (6 points) b. The average days of inventory in the industry is 73 days. By how much would OVHS reduce its investment in inventory if it could improve its inventory days to meet the industry average? (7 points) c. OVHS purchases goods from its supplier on terms of 3/15, Net 40. What is the effective annual cost to the firm if it chooses not to take the discount and makes its payment on day 40? (6 points) d. What is the effective annual cost to the firm if it chooses not to take the discount and makes its payment on day 50? (6 points) Case 1. (25 points) The ShireLodge provides a residential convention service in England's Yorkshire Dales. The lodge's general manager is concerned about cash flow in the next few months particularly as insurance will soon be due for payment. The following revenue and expense estimates have been developed for the first four months of 2021. January 10.000 February 12.000 March 13.000 April 14.000 Convention sales revenue Fixed costs: Salaries Ground maintenance Insurance 4.000 500 420 4.000 500 420 4.000 500 420 4.000 500 420 It has been estimated that sales in December 2020 will be 8,000. Previous cash collections indicate that 10 per cent of all ales are collected in the month prior to the sale as a deposit. Then, 50 per cent of all sales are collected in the month of the sale, and 40 per cent of sales are collected in the month following the sale. Variable costs are 15 per cent of revenue. Ninety per cent of variable costs are paid in the month of the sale to which they relate, and the remainder 10 per cent are paid in the month prior to the sale (purchase of some food and other items in preparation for conventions). Salary and ground maintenance fixed cost are paid for as they are incurred. Insurance is paid for twice year, in January and July. It is estimated that on 1st January 2021 the lodge will have 4.200 in its bank account, Prepare a cash budget showing receipts, payments, and opening and closing cash balances for each of the first three months of 2021. Case 4. (25 points) Ohio Valley Homecare Suppliers, Inc. (OVHS), had $20 million in sales in 2009. Its cost of goods sold was $8 million, and its average inventory balance was $2,000,000. a. Calculate the average number of inventory days outstanding for OVHS. (6 points) b. The average days of inventory in the industry is 73 days. By how much would OVHS reduce its investment in inventory if it could improve its inventory days to meet the industry average? (7 points) c. OVHS purchases goods from its supplier on terms of 3/15, Net 40. What is the effective annual cost to the firm if it chooses not to take the discount and makes its payment on day 40? (6 points) d. What is the effective annual cost to the firm if it chooses not to take the discount and makes its payment on day 50? (6 points)