Question 1: Slater Lamp Manufacturing has an outstanding issue of preferred stock with an $80 par value and an 11% annual dividend.
a. What is the annual dividend amount (per share)? If it is paid quarterly, how much will be paid each quarter (per share)?
b. If the preferred stock is noncumulative and the board of directors has passed (not paid) the preferred dividend for the last 3 years, how much must be paid to preferred stockholders (per share) before dividends are paid to common stockholders?
c. Of the preferred stock is cumulative and the board of directors has passed the preferred dividend for the last 3 years, how much must be paid to preferred stockholders (per share) before dividends are paid to common stockholders?
Question 2: What is management's goal with respect to the management of cash and marketable securities? How is the level of safety stock of cash determined?
Question 3: Wicklow Products currently has an average collection period of 45 days and annual credit sales of $1 million. Assume a 360-day year.
a. What is the firm's average accounts receivable balance?
b. If the variable cost of each product is 60% of sales, what is the average investment in accounts receivable?
Question 4: Describe in your own words why separation of duties is often described as the cornerstone of internal control for safeguarding assets. Describe what can happen if the same person has custody of an asset and also accounts for the asset.