Need Finance 100 homework help. See attached sheet. Please keep in the same format when answering question. Thank you in advance.
FIN100 Week 9 Homework Chapter 15 & 16 CHAPTER 15 1. Pretty Lady Cosmetic Products has an average production process time of forty days. Finished goods are kept on hand for an average of fifteen days before they are sold. Accounts receivable are outstanding an average of thirty- five days, and the firm receives forty days of credit on its purchases from suppliers. a. Estimate the average length of the firm's short-term operating cycle. How often would the cycle turn over in a year? 50 Days Operating cycle= Inventory period+ Receivable period + (40days + ? days) + ? days= ?days # turns per year=365/?=time b. Assume net sales of $ 1,200,000 and cost of goods sold of $ 900,000. Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these three accounts? $53,424.66 Inventory period=Inventory/ (COGS/365) ??=Inventory/(?/365) Inventory= 135,616.44 Receivables period= AR/(Sales/3655) 35=AR/(?/365) AR= 115,068.49 Payment period=AP/(COGS/365) 40=AP/ (?/365) AP=$98,630.14 Net Financing =AR+Inventory-AP = ?+?-? = $152,054.79 FIN100 Week 9 Homework Chapter 15 & 16 CHAPTER 16 4. Suppose the Robinson Company had a cost of goods sold of 1,000,000 in 2010 and $1,200,000 in 2011. a. Calculate the inventory turnover for each year. Comment on your findings. Robinson Company Sales Cost of Goods sold Profit margin 2010 $1,200,000 $1,000,000 5.0% Accounts Receivable Inventory Accounts Payable $300,000 $350,000 $200,000 Sales/ day= COGS/day= $3,287.67 $2,739.73 $3,561.64= 3,2287.67= $1,300,000/365 $1,2200,000/36 6 a. Inventory conversion period= Inventory/ COGS per day ? Days ? Days b. Average collection period= AR/ sales per day ? Days ? Days c. Average payment period= AP/COGS per day ? Days ? Days d. Operating cycle=Inventory conversion + collection periods ? Days ? Days b. What was Robison's net investment in working capital each year? Net investment in working capital= AR+Inventory-AP (as used in this chapter) 2010 = ? +?-? =$450,000 2011 = ? +?-? $600,000 FIN100 Week 9 Homework Chapter 15 & 16 3. Obtain a current issue of the Federal reserve Bulletin or review of copy from the Fed's Website (www.federalreserve.gov ) or (www.stlouisfed.org) and determine the changes in the prime rate that have occurred since the end of 1998. Comment on any trends in the data. Rates have been low since 2008, what is intended results. 4. Compute the effective cost of not taking the cash discount under the following trade credit terms: a. 2/10 net 40 2 x 100-2 365 = 24.83% 40-10 a. 2/10 net 50 ? x 100-? 365 = ?% ?-? a. 3/10 net 50 ? x 100-? 365 = ?% ?-? a. 2/20 net 40 2 100-? x 365 = ?% ?-? 5. What conclusions can you make about credit terms from reviewing your answer to problem 4? Essay
