CASE STUDY #2 You have recently been hired to work in your company's newly established treasury department. The company is a small company that produces cardboard boxes in a variety of sizes for different purchases. The owner of the company, works primarily in the sales and production areas of the company. Currently, the company puts all receivables in one shoe box and all payables in another. Because of the disorganized system, the finance area needs work - and that's what you have been brought in to do. The company currently has a cash balance of $305,000 and it plans to purchase new box folding machinery in the fourth quarter at a cost of $525,000. The machinery will be purchased with cash because of a discount offered. The company's policy is to maintain a minimum cash balance of #125,000. All sales and purchases are made on credit. The owner has projected the following gross sales for each of the next four quarters gross sales Q1 1.310.000 Q2 1.390.000 Q3 1.440.000 Q4 1.530.000 Also, gross sales for the first quarter of the next year are projected at $1,405,000. The company currently has an accounts receivable period of 53 days and an accounts receivable balance of $ 645,000. 20% of the accounts receivable balance is from a company that has just entered bankruptcy, and it is likely this portion of the accounts receivable will never be collected. The company typically orders 50% of the next quarter's projected gross sales in the current quarter, and suppliers are typically paid in 42 days. Wages, taxes and other costs run about 30% of gross sales. The company has a quarterly interest payment of $135,000 on its long tern debt. The company uses a local bank for its short-term financial needs. It pays 1.5% per quarter on all short-term borrowing and maintains a money market accounts that pays 1% per quarter on all short-term deposits. You have been asked to prepare a cash budget and short term financial plan for the company under the current policies. You have also been asked to prepare additional/alternative plans based on changes in several inputs. 1. Use the numbers given to complete the cash budget and short-tern financial plan in Excel. (Sheet 1) 2. Rework the cash budget and short-term financial plan assuming the minimum balance is changed to $100,000 (Sheet 2) question 1 and 2 is the same shee

You must show all of your work for each problem. Make sure your workflows logically and solutions are identified clearly.  If any problems involving writing, please use complete sentences. Writing Off a Large Uncollectable Receivable: Concept Connection 1. Canaday Ltd. has the following receivables balances ($M): Gross accounts receivable $175 Bad-debt reserve                  (3)     Net accounts receivable     $172 Two years ago a customer was approved for an unusually large credit sale of $7M over the objections of the credit and collections department. Shortly after the sale, the customer’s business began to deteriorate due to an unexpected recession. To date, it has paid only $2M against the order despite the fact that it has consumed all of the material purchased. The collections department has worked diligently to collect the remaining $5M without success. The customer filed for bankruptcy this morning with essentially no assets to pay a large number of creditors. Evaluate the…

Northwestern Bank (NB) offers only checking accounts. Customers can write checks and use a network of automated teller machines. NB earns revenue by investing the money deposited; currently, it averages 4.1 percent annually on its investments of those deposits. To compete with larger banks, NB pays depositors 0.3 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATM Visiting branch Processing transactions Managing functions Total overhead ATM uses Branch visits Number of transactions Average deposit Cost Driver Data on two representative customers follow: Required: Number of uses Number of visits Number of transactions Total deposits Emily 40 5 200 $ 10,000 Jacob 130 45 520 $ 10,000 Cost $ 1,843, 200 1,339, 200 8,110,080 7,238,400 $ 18,530,880 Driver Volume 3,072,000 uses 279,000 visits 122,880,000 transactions $ 579,090,000 in deposits a. Compute the operating profit for Northwestern Bank. b. Compute the profit…

Can you assist in giving a short pointer and summary from below paragraph   Covid-19 has had devastating effects on millions of lives. People have lost jobs, businesses and suffered significant setbacks in their careers and financial goals. Many are worried about their finances and must make smarter financial decisions going forward. It will be beneficial to banks to offer money management services, not only to their customers but to the general public as well. Capital One has already taken on the initiative, providing a money management page on their website geared towards individuals and businesses. More can be done by creating money management apps that can help with budgeting, tracking spending and gaining professional consultations, if necessary, all in one place.According to Bob Neuhaus, vice president of financial services intelligence at J.D. Power, great financial advice is a key differentiator for retail banks at a critical moment in time. If customers are financially…

Consider the following conversation between Gary Means, manager of a division that produces industrial machinery, and his controller, Donna Simpson, a certified management accountant and certified public accountant: Gary: Donna, we have a real problem. Our operating cash is too low, and we are in desperate need of a loan. As you know, our financial position is marginal, and we need to show as much income as possibleand our assets need bolstering as well. Donna: I understand the problem, but I dont see what can be done at this point. This is the last week of the fiscal year, and it looks like well report income just slightly above breakeven. Gary: I know all this. What we need is some creative accounting. I have an idea that might help us, and I wanted to see if you would go along with it. We have 200 partially finished machines in process, about 20% complete. That compares with the 1,000 units that we completed and sold during the year. When you computed the per-unit cost, you used 1,040 equivalent units, giving us a manufacturing cost of 1,500 per unit. That per-unit cost gives us cost of goods sold equal to 1.5 million and ending work in process worth 60,000. The presence of the work in process gives us a chance to improve our financial position. If we report the units in work in process as 80% complete, this will increase our equivalent units to 1,160. This, in turn, will decrease our unit cost to about 1,345 and cost of goods sold to 1.345 million. The value of our work in process will increase to 215,200. With those financial stats, the loan would be a cinch. Donna: Gary, I dont know. What youre suggesting is risky. It wouldnt take much auditing skill to catch this one. Gary: You dont have to worry about that. The auditors wont be here for at least 6 to 8 more weeks. By that time, we can have those partially completed units completed and sold. I can bury the labor cost by having some of our more loyal workers work overtime for some bonuses. The overtime will never be reported. And, as you know, bonuses come out of the corporate budget and are assigned to overheadnext years overhead. Donna, this will work. If we look good and get the loan to boot, corporate headquarters will treat us well. If we dont do this, we could lose our jobs. Required: 1. Should Donna agree to Garys proposal? Why or why not? To assist in deciding, review the corporate code of ethics standards described in Chapter 1. Do any apply? 2. Assume that Donna refuses to cooperate and that Gary accepts this decision and drops the matter. Does Donna have any obligation to report the divisional managers behavior to a superior? Explain. 3. Assume that Donna refuses to cooperate; however, Gary insists that the changes be made. Now what should she do? What would you do? 4. Suppose that Donna is 63 and that the prospects for employment elsewhere are bleak. Assume again that Gary insists that the changes be made. Donna also knows that his supervisor, the owner of the company, is his father-in-law. Under these circumstances, would your recommendations for Donna differ?

BKF.com provides banks access to sophisticated financial information and analysis vla the web, enabling them to Instantly evaluate both personal and commercial loan applications. To better focus on its client services, BKF.com is considering outsourcing some of its Internal functions. Its controller, Jenny Lee, suggests starting with the company's internal email system. She recently attended a conference and learned that GTE and NBC outsource their email function to companies such as Google and Yahoo. Lee began her analysis by identifying the total costs related to last month's in-house email operation, when there were 3,505 employee mailboxes: Variable Costs (varies with mailboxes) Emal license $20,329 Virus protection license 3,505 Miscellaneous 7,711 Fixed Costs Computer hardware 30,844 Total costs $62,389 Lee analyzed the computer hardware costs, identifying its three components: 1. 48% were allocated costs that will continue even if the email system is abandoned. 2. 15% were…

Example One of the companies adopts a central system for the payment of payment bills through the general administration, and this requires an average of 4 days for the checks to reach the customers as well as 1,5 The day of registration of checks before they are deposited in the bank, and the average company receipts are 500 thousand dinars per day. The company is studying the possibility of using mailboxes through renting, and this will reduce the time for mailing checks by an amount 2,5 day, and the time required to prepare checks for deposit is reduced by one day. Required: 1. What is the amount of cash that can be released in this process? 2. Determine the alternative cost of the released funds if the return on financial instruments Short term 5%? 3. Is it feasible to use this system when considering the alternative cost? For the liberated money, if the costs of the local mailbox system are 75,000 dinars annually?

Your friend, Gerald, has asked you to help him with his bank statement.  He is sure there are some errors and some things just do not make sense to him. Study the bank statement shown below and answer the questions that follow.   •                  The fee for deposits is  R2,00  plus  R1,00  for every  R100,00.   •                  Stop order payments cost  R2,50  regardless of the amount.    •                  Card  purchases  cost  R1,00  regardless  of  the  amount •                  Gerald's biggest expense is his accommodation, he pays rent to S. Yusuf.   Questions 3.4 Use the information regarding the banking fee to find a mistake in the fee column.  Identify the mistake and correct it.     3.5 How much rent does Gerald pay each month?     3.6 The tax of  R2  440  has already been deducted from  Gerald’s salary.  What tax rate (percentage of his total salary)  is he paying towards tax?  Round off your answer to two decimal values.

ACME Corporation is a software development company that develops software for their clients. Their most popular product of them all is an accounting software suite. It is targeted for small and medium enterprises, and available to be bought in different online software stores. Apart from the basic cashflow management features, it also has various plugins to integrate different business operations such as inventory, purchases and invoicing. A perpetual license costs a company around HK$100,000 without the need to pay periodically for maintenance. a)  A sales representative had been approaching Company X proactively, asking them to buy a copy of their product. A manager in Company X thought the product itself is suitable, but rejected the offer, quoting the high price and their investment of buying the software is too risky for the company to bear. If you were an executive in ACME and wanted to address concerns expressed by Company X. What do you think would be a suitable alternative…

One objective of managing a firm's cash is to process its cash receipts as quickly as possible. Banks provide many services to process incoming payments quickly and efficiently. Consider the case of Sandberg Industries: Sandberg Industries owns an office building that it fents to Graham Company. Sandberg Industries and Graham have an agreement in which Graham's bank transfers the monthly rent automatically to Sandberg Industries' account. Which cash management technique is Sandberg using? Concentration banking A preauthorized check A lockbox arrangement