You have to test cash and PP&E of your client. Both accounts have the same balance at the end of the year: $25 million. In a typical company, which account will you spend more time testing AND WHY?
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You have to test cash and PP&E of your client. Both accounts have the same balance at the end of the year: $25 million. In a typical company, which account will you spend more time testing AND WHY? |
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- The financial manager of a firm wants to determine the amount of cash outlays to be spent for the next period. He asked the help of the accountant and the latter provided a cash budget for the next year. According to the computations, the company would be incurring cash expenses of P6,612,500 per month. The financial manager has estimated a cost of P40 per transaction in case non-cash asset is converted to cash. The firm’s opportunity cost ratio is 12%. The optimum cash balance is? The average cash balance is? the number of conversion made during the year is? The total cash cost is?The financial manager of Shatap Corporation wants to determine the amount of cash outlays to be spent for the next period. He asked the help of the accountant and the latter provided a cash budget for the next year. According to the computations, the company would be incurring cash expenses of $6,612,500 per month. The financial manager has estimated a cost of $40 per transaction in case non-cash asset is converted to cash. The firm's opportunity cost ratio is 12 %. What is the optimum cash balance, the average cash balance, the number of conversion made during the year, and the total cash cost?The financial manager of Sarap Corporation wants to determine the amount of cash atlays to be spent for the next period. He asked the help of the accountant and the lattes provided a cash budget for the next year According to the computation, the company would be incurring cash expenses of P6,612,500 per month. The financial manager has estimated a cost of P40 per transaction in case non-cash asset is converted to cash. The firm's opportunity cost ratio is 12% a) the optimum cash tufence is? b) The average cash balance is? c) the number of conversion made during the year? d) The total cash cost is? Please help me with these. Thank youuuu!
- The financial manager of Sarap Corporation wants to determine the amount of cash outlays to be spent for the next period. He asked the help of the accountant and the latter provided a cash budget for the next year. According to the computations, the company would be incurring cash expenses of P6,612,500 per month. The financial manager has estimated a cost of P40 per transaction in case non-cash asset is converted to cash. The firm's opportunity cost ratio is 12%. a. The optimum cash balance is?Paradise Retailers, Inc. (PRI) determined that $1,500,000 is needed for cash transactions made during the next year. Each time PRI deposits money in its checking account, a charge of $12.95 is assessed to cover clerical costs. If PRI can hold marketable securities that yield 4.5%, and then convert these securities to cash at a cost of only the $12.95 deposit charge, what is the optimal cash amount C* to transfer from marketable securities to the checking account according to the Baumol Model?The financial manager of Sarap Corporation wants to determine the amount of cash outlays to be spent for the nextperiod. He asked the help of the accountant and the latter provided a cash budget for the next year. According tothe computations, the company would be incurring cash expenses of P6,612,500 per month. The financial managerhas estimated a cost of P40 per transaction in case non-cash asset is converted to cash. The firm’s opportunity costratio is 12%.a. The optimum cash balance is?b. The average cash balance is?c. the number of conversion made during the year is?d. The total cash cost is?
- You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year,(b) what is your Net Working Capital • Current inventory = $ 180,000.00 • Annual sales = $ 700,000.00 • Accounts receivable = $ 165,000.00 • Accounts payable = $ 85,000.00 • Total annual purchases = $ 567,000.00 • Purchases credit terms: net 30 days. • Receivables credit terms: net 50 days.Quest Ltd, a new company, is being established to manufacture and sell an electronic tracking device: the Trackster. The owners are excited about the future profits that the business will generate. They have forecast that sales will grow to 2,600 Tracksters per month within five month and will be at that level for the remainder of the first year. The owners will invest a total of P250,000 in cash on the first day of operations (that is the first day of Month 1). They will also transfer non-current assets into the company. Extracts from the company’s business plan are shown below. Sales The forecast sales for the first five months are: Months Trackster (units) 1 2 3 4 5 1,000 1,500 2,000 2,400 2,600 The selling price has been set at P140 per trackster. Sales Receipts Sales will be mainly through large retail outlets. The pattern for the receipt of payment is expected to be as follows: Time of payment % of sales value Immediately One month…On average, a firm collects checks totaling $250,000 per day. It takes the firm approximately 4 days from the day the checks were mailed until they result in usable cash for the firm. Assume that (1) a lockbox system could be employed which would reduce the cash conversion procedure to 2 1/2 days and (2) the firm could invest any additional cash generated at 6% after taxes. The lockbox system would be a good buy if it costs $25,000 annually. a. True b. False Explain
- On average, a firm collects checks totaling $250,000 per day. It takes the firm approximately 4 days from the day the checks were mailed until they result in usable cash for the firm. Assume that (1) a lockbox system could be employed which would reduce the cash conversion procedure to 2 1/2 days and (2) the firm could invest any additional cash generated at 6% after taxes. The lockbox system would be a good buy if it costs $25,000 annually. a. True b. FalseAmerican Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The firm’s operating-cycle investments are $30 million per year.Cost of goods sold are $20 million, and purchases are $15 million. a. Calculate the firm’s operating cycle. b. Calculate the firm’s cash conversion cycle. c. Calculate the amount of resources needed to support the firm’s cash conversion cycle. d. Discuss how management might be able to reduce the cash conversion cycle.A business plans to use £20,000 of cash during the forthcoming year. It holds most of its cash in a deposit account from which it costs £30 to make each withdrawal and which pays interest at 10 per cent p.a. What is the optimal size for each withdrawal?
