Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Textbook Question
Chapter 22, Problem 3Q
Is it true that if a firm calculates its days sales outstanding, it has no need for an aging schedule? Explain your answer.
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Students have asked these similar questions
In the case of decrease the operating cash cycle, which one of the following actions should be taken?
A Delay payments to suppliers B Increase the inventory level while maintaining constant salesC Increase the period of time for which credit is granted to customers
D Decrease the rate at which the average inventory is sold
Explain the purpose of the inventory turnover ratio?
Is it possible for a firm to have a high current ratio and still have difficulty paying its current bills? Why or why not?
What affects the firm’s operating break-even point?
Several factors affect a firm’s operating break-even point. Based on the scenarios described in the following table, indicate whether these factors would increase, decrease, or leave unchanged a firm’s break-even quantity—assuming that only the listed factor changes and all other relevant factors remain constant.
Increase
Decrease
No Change
The product’s sales price increases.
The amount of debt increases, causing the firm’s total interest expense to increase.
The firm’s fixed costs increase.
When fixed costs are high, a small decline in sales can lead to a decline in return on invested capital (ROI).
Chapter 22 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 22 - Prob. 1QCh. 22 - Prob. 2QCh. 22 - Is it true that if a firm calculates its days...Ch. 22 - Firm A had no credit losses last year, but 1% of...Ch. 22 - Indicate by a (+), (), or (0) whether each of the...Ch. 22 - Cost of Bank Loan On March 1, Minnerly Motors...Ch. 22 - Cost of Bank Loan Mary Jones recently obtained an...Ch. 22 - Del Hawley, owner of Hawleys Hardware, is...Ch. 22 - Gifts Galore Inc. borrowed 1.5 million from...Ch. 22 - Relaxing Collection Efforts The Boyd Corporation...
Ch. 22 - Tightening Credit Terms Kim Mitchell, the new...Ch. 22 - Effective Cost of Short-Term Credit Yonge...Ch. 22 - Monitoring of Receivables
The Russ Fogler Company,...Ch. 22 - Prob. 10PCh. 22 - Prob. 1MCCh. 22 - Prob. 2MCCh. 22 - Prob. 3MCCh. 22 - Prob. 4MCCh. 22 - Prob. 5MCCh. 22 - Prob. 6MCCh. 22 - Prob. 7MCCh. 22 - Assume that it is now July of Year 1 and that the...Ch. 22 - Now assume that it is several years later. The...Ch. 22 - Prob. 10MCCh. 22 - Prob. 11MCCh. 22 - Prob. 12MCCh. 22 - Prob. 13MCCh. 22 - Prob. 14MCCh. 22 - Suppose the firm makes the change but its...
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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
- What does a low ratio in Creditors Turnover Ratio indicate? a. Company collects the money fast from Debtors b. It shows the speed at which the inventory will be converted into sales c. Company is delaying the payment to the creditors d. Company is making the payment to the creditors very promptlyarrow_forwardWhat does a high ratio in Creditors Turnover Ratio indicate? a. Company is delaying the payment to the creditors b. Company is making the payment to the creditors very promptly c. It shows the speed at which the inventory will be converted into sales d. Company collects the money fast from Debtorsarrow_forwardSuppose the company has to revise its estimates because of a downturn in the economy. Unit sales for August, September, and October will be half (50%) of the original estimates. Revise the estimates in cells 1311 through 1313. After this is done, check your forecasted balance sheet. It should still balance! What effect will this new state of affairs have on net income and borrowing? Explain why these items changed.arrow_forward
- If a firm wants to increase its working capital efficiency, it should: Increase its days inventory and days receivable and decrease days payable Decrease days inventory and increase days receivable and days payable Decrease days inventory, days receivable and days payable Decrease days inventory and days receivable and increase days payable Decrease cost of goods sold and interest expensearrow_forwardIf we hold all other factors the same, an increase in interest rates will: a. Decrease the present value of a stream of constant payments we expect to receive. b. Increase the present value of a stream of constant payments we expect to receive. c. Decrease the interest revenue that a company will earn on its funds that it holds in its interest-bearing checking account. d. No impact on how much a company should be willing to pay for factory equipment that is expected to significantly reduce the factory electricity costs.arrow_forwardExplain what the significance of having a high/low Price-to-Book ratio means about the company's anticipated growth or decline.arrow_forward
- Which of the following will decrease the length of the operating cycle? 1 Reducing the production period 2 A decrease in the period of credit given by suppliers 3 A decrease in the period of credit given to customers Select one: A. 1& 2 B. 1 & 3 C. 2 & 3 D. All of the abovearrow_forward. Which of the following costs will tend to increase if a firm switches to a restrictive short-term financial policy from a flexible short-term policy?I. lost sales due to out-of-stock itemsII. inventory warehousing costsIII. cash-outsIV. total annual order costs A. I and III only B. II and IV only C. I, III, and IV only D. I, II, and IV only E. I, II, III, and IVarrow_forwardAn investor worried about a company’s long-term solvency would most likely examine its:A . current ratio.arrow_forward
- If a company’s current ratio declined in a year during whichits quick ratio improved, which of the following is the mostlikely explanation?a. Inventory is increasing.b. Inventory is declining.c. Receivables are being collected more rapidly than inthe past.d. Receivables are being collected more slowly than inthe past.arrow_forwardContrast the effects that LIFO vs. FIFO would have on ending inventory, net income and cash flow in a period in which prices are rising?arrow_forwardthe margin of safety is the reduction in sales that can occur before the break-even point is reached. It measures the cushion that a particular level of sales can decline without incurring a loss. Discuss two limitations of relying on a margin of safety when predicting future sales. Is it reliable? Why or why not? Provide support for rationale.arrow_forward
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