Explain how each of the following factors would probably affect a firm’starget cash balance if all other factors were held constant.a. The firm institutes a new billing procedure that better synchronizes itscash inflows and outflows.b. The firm develops a new sales forecasting technique that improves itsforecasts.
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Explain how each of the following factors would probably affect a firm’s
target cash balance if all other factors were held constant.
a. The firm institutes a new billing procedure that better synchronizes its
b. The firm develops a new sales
forecasts.
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- Which of the following is false? a. Baumol model helps firm to find out their desirable level of cash balance under certainty b. Any presence of a cash buffer affects the cost of holding cash and ultimately the annual cost of cash for a particular firm c. A higher average daily disbursement float than average daily collection float is more desirable for a firm d. Accounts payable increase the number of days a firm’s resources are tied up in the operating cycleCritically evaluate and compare the firm’s Profit and Loss Statement and the Cash Flow Statement and explain whether the two are in harmony of each other. Make suggestions for improvement, in case you find any dissonance.1.-The sales forecast is used as key information in the short-term financial planning process. True or False? Please double check your answer.
- Predicting budgets, cash flows, and financial health may avail investors and companies to investment and market opportunities. How does one use financial statements to forecast the future needs of a business? What are some advantages of forecasting? Examples of investment and market opportunities that can be gained from proper financial statement forecasting?We have all heard of Return on Investment or (ROI). Please research anddescribe five other business metrics that you may use in your analysis withyour business plan.Also, please describe how these ratios are calculated for example...Quick Ratio or Acid Test, Cash + Accounts Receivable ÷ Current Liabilities.Required: Select the analytics type (descriptive, diagnostic, predictive and prescriptive) to the analytics types used. Types of Analyses Used Ratio analytics Bank reconciliation Scenario analytics Pivot table analytics to find most profitable product or customer Classifying firms into those expected to have committed fraud vs. no fraud Fuzzy matching of vendors and employees to see if there are similarities in names or addresses Capital budgeting-evaluating cash flows Variance analytics-why price or quantity used is greater than expected Type of Analytics Descriptive Analytics Diagnostic Analytics Predictive Analytics Prescriptive Analytics
- The AFN equation provides useful insights into the forecasting process, but this equation assumes that all of the firm's key ratios remain constant, which is not likely to hold true. Consequently, it is useful to forecast the firm's financial statements. The firm begins with forecasting its (income statement, cashflow statement and cash budget)? which then feeds into the firm's balance sheet. Management looks at operating ratios and their relationship with industry and benchmark averages. The forecasted income statement begins with the prior year's income statement and is adjusted for the sales growth forecast. Some inputs for the income statement are not under the firm's control - for example, tax and interest rates. The forecasted balance sheet is calculated from asset ratios that management has reviewed and changed based on industry and benchmark averages. An Excel spreadsheet is used for this analysis because changes in assumptions, financing, and ratios can be made to the…The components of the operating cycle Proper management of a firm’s working capital is vital and challenging due to the______(pick either uncertainty or certainty.)and________(Pick either synchronized timing or unsynchronized timing.) between a firm’s cash inflows and outflows. Consider this data for Galaxy Wholesalers Incorporated and use it to complete the table: Selected Financial Data for Galaxy Wholesalers Incorporated Average cash $32,813 Average accounts payable $440,000 Average accounts receivable $787,500 Average inventories $393,750 Average cash sales $2,625,000 Average credit sales $7,875,000 Average cost of goods sold $4,725,000 Average number of days per year 365 days Inventory conversion period 30.42 days Payables deferral period ____.____days Receivables conversion period ____.____days Cash conversion cycle ____.____daysplease answer all the question. 1. Identify two important variables to be considered when making an investment decision. 2. What must a company do in the long run to be able to provide a return to investors and creditors? 3. What is the primary objective of financial accounting? 4. Define net operating cash flows. Briefly explain why periodic net operating cash flows may not be a good indicator of future operating cash flows. 5. What is meant by GAAP? why should all companies follow GAAP in reporting to external users? 6. Explain the roles of the SEC and the FASB in the sitting of accounting standards.
- All else the same, which of the following management decisions would help alleviate the problem of a buildup of excess cash? O Increase credit terms to customer; i.e. allow them more time to pay Borrow short term to increase the size of the Interest Tax Shield O Reduce credit terms to customers: i.c. make them pay sooner O Reduce the dividend payout ratio to crcate higher levels of retained earnings In evaluating the accuracy of your forecast, which of the following might be indicative of the need for a revised forecast? O The company's Dividend Payout Ratio is likely too high in the forecast period O The growth rate of Sales is trending toward 4-5% over the forecast period O The ratio of Sales/(Invested Capital) is much higher in the forecast period than in the Historical period from which you derived your forecast O The firm's Forecast D/E ratio is holding steady over the course of the forecast An effective financial plan can be either static or dynamic (True or False) O True FalseAy 4 You are briefed about a business plan to launch a new product by your own company. As financial experts, you are being requested to identify all possible cashflows and to estimate strength of each cashflow. Please present your estimation of cashflow. In case of any facts based on market research, please make your own assumption and highlight the same. You are advised to use BMC.Using the data in the following table for a number of firms in the same industry, dothe following:•a. Compute the total asset turnover, the net profit margin, the equity multiplier, andthe return on equity for each firm.b. Evaluate each firm’s performance by comparing the firms with one another.Which firm or firms appear to be having problems? What corrective actionwould you suggest the poorer performing firms take? Finally, what additional data would you want to have on hand when conducting youranalyses?Firm (in million Dollars A B C D Sales $20 $10 $15 $25 Net Income after sales 3 0.5 2.25 3 Total Assets 15 7.5 15 24 Stockholders’ Equity 10 5 14 10