EBK FOUNDATIONS OF FINANCE
10th Edition
ISBN: 9780135160473
Author: KEOWN
Publisher: PEARSON CO
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Chapter 17, Problem 8SP
a)
Summary Introduction
To determine: Average investment in inventory
b)
Summary Introduction
To determine: Average investment in inventory
c)
Summary Introduction
To determine: Average investment in inventory
d)
Summary Introduction
To determine: Average investment in inventory
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Consider the operations of a manufacturing company that operates 340 days a year, On average it takes 55 days to sell a piece of
inventory. All its products are marked up by 12%; vendors are paid cash, sales are cash and all capital is borrowed @ 32 %. Answer the
following as indicated.
Case 1:
The invnetory turnover ratio, ITR =
The annual rate of return on capital after interest payment =
Case 2:
Now suppose that it pays its vendors after approximayely 12 days.
Under this change, the annual rate of return on capital after interest payment
Suppose a firm has had the following historic sales figures. What would be the forecast for next year's sales using the average approach?
Year:
2009
2010
2011
2012
2013
Sales
$1,500,000
$1,750,000
$1,400,000
$2,000,000
$1,600,000
If the annual cost of goods sold is $30,000,000 and the average inventory is$5,000,000,a. What is the inventory turns ratio?b. What would be the reduction in average inventory if, through better materialsmanagement, inventory turns were increased to 10 times per year?c. If the cost of carrying inventory is 25% of the average inventory, what is the annual savings?
Chapter 17 Solutions
EBK FOUNDATIONS OF FINANCE
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - What are the two major objectives of the firms...Ch. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQ
Ch. 17 - Prob. 11RQCh. 17 - Prob. 1SPCh. 17 - Prob. 2SPCh. 17 - Prob. 3SPCh. 17 - (Interest rate risk) Two years ago your corporate...Ch. 17 - Prob. 6SPCh. 17 - Prob. 7SPCh. 17 - Prob. 8SPCh. 17 - Prob. 9SPCh. 17 - Prob. 10SPCh. 17 - Prob. 11SPCh. 17 - Prob. 1MCCh. 17 - Prob. 2MCCh. 17 - Prob. 3MCCh. 17 - Prob. 4MC
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