Q1. Data on Huizenga Enterprises for the most recent year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365-day year.

Sales$150,000

Accounts receivable$23,000

Days sales outstanding (DSO)55.97

Benchmark days sales outstanding (DSO)35.00

Q2.Increased Efficiency, Inc. is looking for ways to shorten its cash conversion cycle. It has annual sales of $36,500,000, or $100,000 a day on a 365-day basis. The firm's cost of goods sold is 60% of sales. On average, the company has $9,000,000 in inventory and $8,000,000 in accounts receivable. Its CFO has proposed new policies that would result in a 20% reduction in both average inventories and accounts receivable. She also anticipates that these policies would reduce sales by 10%, while the payables deferral period would remain unchanged at 40 days. What effect would these policies have on the company's cash conversion cycle?

Q3.Steady Eddie Corp. is constructing its cash budget. Its budgeted monthly sales are $5,000, and they are constant from month to month. 40% of its customers pay in the first month and take the 2% discount, while the remaining 60% pay in the month following the sale and do not receive a discount. The firm has no bad debts. Purchases for next month's sales are constant at 50% of projected sales for the next month. "Other payments," which include wages, rent, and taxes, are 25% of sales for the current month. Construct a cash budget for a typical month and calculate the average net cash flow during the month.

Q4.Perpetually Slow Pay, Inc. buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 55 days. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?

Q5.Data on Stretch It Out, Inc. for the most recent year are shown below, along with the payables deferral period (PDP) for the firms against which it benchmarks. The firm's new CFO believes that the company could delay payments enough to increase its PDP to the benchmarks' average. If this were done, by how much would payables increase?

Use a 365-day year.

Cost of goods sold =$75,000

Payables =$5,000

Payables deferral period (PDP) =24.33

Benchmark payables deferral period =30.00