Answered: trade-offs involved in the decision of…

trade-offs involved in the decision of how much inventory or cash the firm should carry. Answer for cash level separatel

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 21Q: A fellow student studying managerial accounting says. The net present value (NPV) weighs early...

See similar textbooks

Related questions

Q: If you were the financial manager of Stars and StripesClothing, what would you do with the excess…

A: Step 1 Before assigning your surplus funds, be sure you have access to them. Given how quickly…

Q: How to incease profitability in a service company if Operating cash does not cover debt?

A: operating cash flows - cash flows from the operations of the business are known as operating cash…

Q: If a company is experiencing cash flow difficulties, it may opt to sell its receivables to a third…

A: Any company can face cash crunch/ cash burn/ cash difficulties because of inefficient collection…

Q: Even though profits may be strong and the balance sheet solid, some say cash is still the…

A: Cash is the lifeblood of a business and business needs to generate enough cash from its activities…

Q: A manager in a MNC should understand that appreciation in a firm's local currency causes a ____ in…

A: Local currency has direct relationship with cash flows.

Q: Briefly explain three reasons why cashflow management is challenging for shipping companies…

A: Cash Flow Management : Cash for any business is the most important asset as it is the absolute…

Q: Discuss the factors that are likely to influence the desired level of cash of a company

A: Cash involves cash in hand or bank balance or cash equivalents that can be immediately convertible…

Q: Liquidity means naving access to ready cash, including savings and credit, tO COV nexpected…

A: Liquidity refers to the availability of ready cash or equivalents with the firm which can be used to…

Q: a) Calculate the amount of cash recelve business receive enough cash to cover their liquidity needs?…

A: Funds Requirement € 10,000 Promissory Note-1 € 5,500 Maturity period 30 days…

Q: e establishment and usage of a zero-balance account in relation to the cash management strategies of…

A: Zero balance account is very common strategy adopted by companies it is one of the common strategy…

Q: Accounting statements represent a company’s earnings, but this is not the real cash that a company…

A: The statement that best describes the cash flows: The cash flows that are obtained after subtracting…

Q: fers from Free Cash Flows (FCF) and discuss the types of businesses for which this differences will…

A: Difference between EBITDA and free cash flow : Analysts utilise a variety of measures to assess a…

Q: A higher average daily disbursement float than average daily collection float is more desirable for…

A: Account payables are the payments to be done to the supplier and vendors and they provide credits…

Q: Question 1 The following has been extracted from the financial statements of Rowett: Statement of…

A: Cash conversion cycle indicates that number of days required to recover money from inventories to…

Q: Explain how each of the following factors would probably affect a firm’s target cash balance if all…

A: Overdraft: An overdraft is an extension of credit from a loaning organization that is arranged if an…

Q: How can you tell by looking at a company's Statement of Cash Flows if they are using up its current…

A: In a cash flow statement, cash flows from operating activities are those activities which are done…

Q: nvolved

A: Large inventory holding causes a plethora of difficulties, such as: High carrying cost: The…

Q: Why might smaller companies prefer to use techniques such as cash payback and accounting rate of…

A: Cash Payback: A simplified explanation is that the cash payback approach entails multiplying a…

Q: Describe what would happen to a company if it ran out of cash. Explain the importance of good…

A: Funds are the basic necessity to run the business. Funds are like blood for the business. No…

Q: How cash budget statement can be used to invest the amount of cash that a firm carries and to…

A: Answer: Usually, cash budget is the cash allocations, reflects a business or firm’s cash receipts…

Q: a. Discuss the factors that are likely to influence the desired level of cash of a company b.…

A: “Since you have posted multiple questions, we will solve first question for you. If you want any…

Q: You hear a saying "In order to find out how much cash a company is generating, you have to look at…

A: Net profit of the company means how much profits or income has been earned in a particular period of…

Q: what factors determine the need cash in the firm's operations?

A: The following are the factors: 1. Purchase and Sale Terms 2. Receivables Collection Period 3. The…

Q: he firm has adequate cash to pay bills

A: The stakeholders of the entity evaluate the financials of the company in many possible ways.…

Q: Which of the following managers has a direct influence over a firm's cash? Multiple Choice Credit…

A: The cash is influenced by the person holding it.

Q: If you were the financial manager of Stars and Stripes Clothing, what would you do with the excess…

A: The financial manager would have used the additional money accessible in fragment with Stars and…

Q: Determine ways to improve the cash flows of an organization by addressing the following questions:…

A: Cash flow: It is the flow of cash inside & outside the company.

Q: Your CFO tells you as finance manager that he feels much safer to have a larger inventory and cash…

A: Inventory is defined as the available goods for the sales as well as raw materials, which are…

Q: Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are…

A: Free Cash Flow=Net Income + Non Cash Expenses - Increase in working capital - Capital Expenditure…

Q: What would happen to a company if it ran out of cash? Explain the importance of good working capital…

A: Working capital is excess amout of current assets over current liabilities. Cash conversation cycle…

Q: Assume you are the financial officer of a major firm. The president of the firm has just stated that…

A: Current assets: The assets of the company that cannot be converted into cash within a period of…

Q: Which of the following circumstances would result in an increase in cash from operations but not an…

A: Cash flow statement: It is a statement which reports the cash inflows and outflows of a business…

Q: 6. Free cash flow Accounting statements represent a company's earnings, but this is not the real…

A: Free cash flows is the cash generated after adjusting for any operational cost and capital assets.…

Q: Explain how each of the following factors would probably affect a firm’starget cash balance if all…

A: Cash balances are held by companies primarily to pay for routine business transactions, to maintain…

Q: Explain how the EOQ inventory model can be modified and used to help determine the optimal sizeof a…

A: Economic order quantity (EOQ) aims to assess the correct amount of inventories to be ordered in…

Q: What are the key reasons for financial managers to maintain cash reserves? How much or how little…

A: Introduction: In order to fulfill immediate and short-term financial requirements, cash reserves…

Q: Which of the following would increase cash flow for a firm? a. A purchase of fixed assets b. Cash…

A: In this question we are given 4 options related to cash flow and we require to select the correct…

Q: A senior financial executive for a large public company remarked to a stock market analyst: I don ’…

A: Ans. The objective of earning profits in a business is obviously a primary objective for the…

Q: Which of the following statements is false? O A. A positive cash conversion cycle means the company…

A: Cash Conversion Cycle is cycle that shows that how many days company takes to covert its cash into…

Q: f the following is false? a. Baumol model helps firm to find out their desirable level of cash…

A: Account payable are the amount of money to be given to the suppliers and creditors who provides…

Q: Explain why cash management is critical for young, fast growing companies and describe how a company…

A: Why cash management is critical Cash is the lifeblood of a business and a business needs to generate…

Concept explainers

Cash Book

So, before coming to the topic of cash books, I will let you briefly explain about the cash so that you all can be familiar with the word cash. Cash comes under the category of the current asset which is used as a medium of exchange for all the financial transactions in the firm. Cash is something that is universally accepted as a mode of payment. So, now comes to the topic i.e., cash book.

Question

Your CFO tells you as finance manager that he feels much safer to have a larger inventory and cash level than before. What are trade-offs involved in the decision of how much inventory or cash the firm should carry. Answer for cash level separately

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Explanation

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Cash and cash equivalents

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Your CFO tells you as finance manager that he feels much safer to have a larger inventory and cash level than before. What are trade-offs involved in the decision of how much inventory or cash the firm should carry. Answer for both inventory level and cash level separately
Your CFO tells you as finance manager that he feels much safer to have a larger inventory and cash level than before. What are trade-offs involved in the decision of how much inventory or cash the firm should carry. Answer for inventory level
What are the lessons for the lessons for investors and corporate managers with respect to market efficiency (check all that apply)? Group of answer choices If stocks are fairly priced, then investors can expect future cash flows that fairly compensate them for the risk of that investment You get paid (in the form of expected returns) for taking on risk If markets are efficient then relevant information quickly gets incorporated into prices Treasury departments of industrial firms should try to outguess the markets in managing their corporate cash
If you were the financial manager of Stars and StripesClothing, what would you do with the excess cash thatthe firm expects in the second and fourth quarters? (
Explain why cash management is critical for young, fast growing companies and describe how a company could seek to cover any cash shortfalls in the future.
Which of the following is false? a. Baumol model helps firm to find out their desirable level of cash balance under certainty b. Any presence of a cash buffer affects the cost of holding cash and ultimately the annual cost of cash for a particular firm c. A higher average daily disbursement float than average daily collection float is more desirable for a firm d. Accounts payable increase the number of days a firm’s resources are tied up in the operating cycle
Explain how the EOQ inventory model can be modified and used to help determine the optimal sizeof a firm’s cash balances. Do you think the EOQapproach to cash management is more or less relevant today than it was in precomputer, preelectronic communications days?
What are some tools that companies have to manage their (net operating) working capital? Provide examples of inventory and receivables management techniques. What is the Cash Conversion Cycle and why is this a useful metric? Are there risks if this is too low?
What would happen to a company if it ran out of cash?Explain the importance of good working capital management and the cash conversion cycle
Discuss the factors that are likely to influence the desired level of cash of a company Outline the advantages and disadvantages of using short term debt, as opposed to long term debt, in the financing of working capital Why cash flows rather than profits are most desirable in financial management? Explain the term “agency relationships” and discuss the conflicts that might exist in therelationship between’i) Shareholder and managersii) Shareholders and creditors
When it comes to working capital, there are several things to manage. From the cash conversion cycle to the floats for disbursements and collections to the age of your accounts receivable and cash discounts on both your AR and AP; it’s all about the cash. What are the factors in a business that are going to make turning an item into cash quickly critical, and are there factors that make turning your capital into cash quickly less important?
Explain how each of the following factors would probably affect a firm’starget cash balance if all other factors were held constant.a. The firm institutes a new billing procedure that better synchronizes itscash inflows and outflows.b. The firm develops a new sales forecasting technique that improves itsforecasts.