Problem 3-21 Income versus Cash Flow (LO3) Ponzi Products produced 100 chain-letter kits this quarter, resulting in a total cash outlay of $10 per unit. It will sell 50 of the kits next quarter at a price of $11, and the other 50 kits in the third quarter at a price of $12. It takes a full quarter for Ponzi to collect its bills from its customers. (Ignore possible sales in earlier or later quarters.) (Negative amount should be indicated by a minus sign.) a. What is the net income for Ponzi next quarter? Net income in second quarter b. What are the cash flows for the company this quarter?

Problem 3-21 Income versus Cash Flow (LO3) Ponzi Products produced 100 chain-letter kits this quarter, resulting in a total cash outlay of $10 per unit. It will sell 50 of the kits next quarter at a price of $11, and the other 50 kits in the third quarter at a price of $12. It takes a full quarter for Ponzi to collect its bills from its customers. (Ignore possible sales in earlier or later quarters.) (Negative amount should be indicated by a minus sign.) a. What is the net income for Ponzi next quarter? Net income in second quarter b. What are the cash flows for the company this quarter?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs

Section: Chapter Questions

Problem 1EP

See similar textbooks

Similar questions

Explain Step By Step Q1: Aztec Products wishes to evaluate its cash conversion cycle (CCC). Research by one of the firm’s financial analysts indicates that on average the firm holds items in inventory for 65 days, pays its suppliers 35 days after purchase, and collects its receivables after 55 days. The firm’s annual sales (all on credit) are about $2.1 billion, its cost of goods sold represent about 67 percent of sales, and purchases represent about 40 percent of cost of goods sold. Assume a 365-day year. A) If Dean Muhammad Suppliers receive an invoice for purchases dated 12/12/2002 subject to credit terms of "2/10, net 30", what is the last possible day the discount can be taken? January 11 January 22 January 30 December 22
2.[EXCEL] Cash conversion cycle: Northern Manufacturing Company management found that during the last year it took an average of 47 days to pay its suppliers, whereas it took 63 days to collect its receivables. The company's days' sales in inventory was 49 days. What was Northern's cash conversion cycle?
P15–1 CASH CONVERSION CYCLE American Products is concerned about managing cash efficiently. On average, inventories have an age of 80 days, and accounts receivable are collected in 40 days. Accounts payable are paid approximately 30 days after they arise. The firm has annual sales of about $30 million. Goods sold total $20 million, and purchases are $15 million. Calculate the firm’s operating cycle. Calculate the firm’s cash conversion cycle. Calculate the amount of resources needed to support the firm’s cash conversion cycle. Discuss how management might be able to reduce the cash conversion cycle.
Question 46 An analyst has recently been hired to improve the performance of SL Energy Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, the analyst wants to determine the firm’s cash conversion cycle. Using the following information and a 365-day year: Current inventory = $160,000; Annual sales = $1,095,000; Accounts receivable = $180,000; Accounts payable = $36,000; Total annual purchases = $730,000. Calculate the firm’s inventory conversion cycle. 18 days 70 days 75 days 80 days Question 47 Based on information from Question 46, Calculate the firm’s receivables collection period. 60 days 70 days 80 days 90 days Question 48 Based on information from Question 46, Calculate the firm’s payables deferral period. 18 days 36 days 75 days 90 days Question 49 Based on information from Question 46~48,…
6. Question 6 The attached table shows financial data (year 2009) for two US retailers: Save-A-Lot Retailers and Wally’s Mart. Assume that both companies have an average annual holding cost rate of 20% (i.e. it costs both retailers $2 to hold an item for one entire year that they procured for $10). How many days, on average, does a product stay in Save-A-Lot’s inventory before it is sold? Assume that stores operate 365 days a year.
Mf3. Q1. Lenny's Pizzeria sells pizzas for a price of $8 per pie and at a cost of $2 per pie. It also has $200,000 in annual fixed operating costs and $100,000 in annual depreciation expenses. Under a 21% corporate lax rate and 10% discount rate, what is the cash break-even quantity of pizzas (rounded to the nearest integer)? A. 28,903 B. 33,333 C. 50,000 D. There is no quantity that allows the firm to break even in cash. Q2. Professor Kostovetsky is interested in buying shares of Microsoft stock but he only wants to buy them at a certain price below their curtent market price. Which order should he submit to his broker? A. Buy at Par Order B. Buy Market Order C. Buy Stop Order D. Buy Limit Order
Problem B: Cash Conversion CycleABC Corporation has P5,000,000 in inventory and P2,000,000 in accounts receivable. Its average daily sales are P100,000. Thecompany has P1,500,000 in accounts payable. Its average daily purchases are P50,000.Required: 1. Days it takes to convert inventory to cash2. Days payable outstanding3. Cash Conversion Cycle in days
Q. 5) Samara Company is the exclusive distributor for a revolutionary bookbag. The productsells for $60 per unit and has a CM ratio of 40%. The company’s fixed expenses are $360,000 peryear. The company plans to sell 17,000 bookbags this year. Required:1. What are the variable expenses per unit?2. Using the equation method:a. What is the break-even point in units and in sales dollars?b. What sales level in units and in sales dollars is required to earn an annual profit of$90,000?c. Assume that through negotiation with the manufacturer the Samara Company is ableto reduce its variable expenses by $3 per unit. What is the company’s new break-evenpoint in units and in sales dollars?3. Repeat (2) above using the formula method.