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Short Exercises 1) Assume that the management of a company is planning to make the following policy changes for the next year. Decide whether each
Short Exercises 1) Assume that the management of a company is planning to make the following policy changes for the next year. Decide whether each will increase, decrease or indefinite or no effect on AFN (External finance requirements). - Sales term in 2016 was n/30, but in 2017 sales terms will be n/45. - Company plans to pay less dividends to stockholders. - Due to some expected problems in the raw materials, company will keep more raw materials inventory. - Company will shorten its purchase terms from n/60 to n/45. - Company will increase the sales commissions to the salespeople. - By improving the production technology, company will reduce waste. - 10 year bonds will be converted into Common Stocks. - Company will keep more cash on hand. - Insurance policies will be paid on an annual basis rather than quarterly basis. - Company will pay the wages on a monthly basis rather than weekly basis
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