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The Zinn Company plans to issue $10,000,000 of 10-year bonds in June to help finance a new research and development laboratory.
Suncoast Boats Inc. estimates that because of the seasonal nature of its business, it will require an additional $2 million of cash for the month of July.
Red-line method; two-bin method; computerized inventory control system, Economic ordering quantity (EOQ); EOQ model; EOQ range.
Assuming the firm’s sales volume remained constant, would you expect it to have a higher cash balance during a tight-money period.
You are a supervisor in a small manufacturing plant and you are part of an internal team which is auditing the plant's practices and procedures.
The Gentry Garden Center sells 90,000 bags of lawn fertilizer annually. The optimal safety stock (which is on hand initially) is 1,000 bags.
Barenbaum Industries projects that cash outlays of $4.5 million will occur uniformly throughout the year.
Give two reasons stockholders might be indifferent between owning the stock of a firm with volatile cash flows and that of a firm with stable cash flows.
Carter Enterprises can issue floating-rate debt at LIBOR +2 percent or fixed-rate debt at 10.00 percent.
Would it be a sound rule to liquidate whenever the liquidation value is above the value of the corporation as a going concern? Discuss.
Why do liquidations usually result in losses for the creditors or the owners, or both? Would partial liquidation or liquidation over a period limit their losses
Gifts Galore Inc. borrowed $1.5 million from National City Bank. The loan was made at a simple annual interest rate of 9 percent a year for 3 months.
Suppose that a firm makes a purchase and receives the shipment on February 1. The terms of trade as stated on the invoice read “2/10, net 40.
Is it true that if a firm calculates its days sales outstanding, it has no need for an aging schedule?
Should the firm relax collection efforts if the opportunity cost of funds is 16 percent, the variable cost ratio is 75 percent, and taxes are 40 percent?
If the interest rate on funds invested in receivables is 18 percent, should the change in credit terms be made?
On March 1, Minnerly Motors obtained a business loan from a local bank. The loan is a $25,000 interest-only loan with a nominal rate of 11 percent.
Mary Jones recently obtained an equipment loan from a local bank. The loan is for $15,000 with a nominal interest rate of 11 percent.
What is the expected return on equity under each current asset level? (Assume a 40 percent effective federal-plus-state tax rate.)
The D.J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new store.
If a firm buys under terms of 3/15, net 45, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its nonfree trade credit
Inventory conversion period; receivables collection period; payables deferral period; cash conversion cycle.
The Rentz Corporation is attempting to determine the optimal level of current assets for the coming year.
Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts.
The Thompson Corporation projects an increase in sales from $1.5 million to $2 million, but it needs an additional $300,000 of current assets.