Question 1: Discuss the avenues to improve working capital management. Discuss the components of working capital and their effects on the firm's value.
Question 2: Discuss the importance and main avenues of cash management. Elaborate on the company's cash cycle, and how it differs from its operating cycle.
Question 3: List and discuss the main objectives of short-term financial planning.
Question 4: Discuss the methods of short-term financing.
Question 5: Your supplier offers terms of 3/20, net 50. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 50?
Question 6: Your firm purchases goods from its supplier on terms of 2.0/10, net 35.
a. What is the effective annual cost to your firm if it chooses not to take the discount and makes its payment on day 35?
b. What is the effective annual cost to your firm if it chooses not to take the discount and makes its payment on day 35?
Question 7: Which of the following one-year, $1000 bank loans offers the lowest effective annual rate?
a. A loan with an APR of 5.9%, compounded monthly.
b. A loan with an APR of 5.9%, compounded annually, with a compensating balance requirement of 9.8% (on which no interest is paid).
c. A loan with an APR of 5.9% compounded annually, with a 1.00% loan origination fee.
Question 8: The Ohio Valley Steel Corporation has borrowed $5 million for one month at a stated annual rate of 9%, using inventory stored in a field warehouse as collateral. The warehouser charges a $5000 fee, payable at the end of the month. What is the effective annual rate of this loan?