Question
Expected sales in the forthcoming year is $ 50,00. The firm plans to stick to the following policies towards the working capital; Debtors would be
Expected sales in the forthcoming year is $ 50,00. The firm plans to stick to the following policies towards the working capital; Debtors would be maintained at 30 days of sales, Creditors would be maintained at 30 days of cost of sales and Inventories would be maintained at 30 days of cost of sales. Assume that the firm wants to keep Working capital sufficient to finance Expected Credit Sales for the length of the Cash Cycle, how much working capital would the firm need? Consider 365 as the number of days in an year for you cycle calculations. (Select the option closest to the answer).
509
487
352
411
426
398
If the firm has excess liquidity, its shareholders consist of High Networth Individuals sunjected to the highest income tax rates, its ROE is very low compared to the peers, the firm should (Select the most appropriate option)
Give cash dividend
Give dividend in kind
Give bonus shares
Give buyback option
Hold on to the cash
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