Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 22, Problem 5MC
Summary Introduction
Case summary:
Person R and his brother person J planned to start a business of wholesale building supply.
Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10th day followed by the sale and 50% on the 40th day, and 20% of the customers on 70th day.
Characters in the case:
- Person R
- Person J
To determines: Average daily sales for the 1st quarter and 2nd quarter and for the full half year. And DSO at the end of the March and June. The indication about customers’ payment by DSO and whether DSO is a good management tool in the current case.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The financial manager of Company X has just received the sales forecast for next year and it indicates that the year's sales are expected to double in the second half. What are the challenges that Company X might face in increasing its production to meet the sales projections and how can these challenges be overcome? What risks does Company X face by ramping-up production to meet the sales forecast?
What is the amount of working capital and the current ratio at the end of this year? What is the acid - test ratio at the end
of this year? What is the accounts receivable turnover and the average collection period? What is the inventory turnover
and the average sale period? What is the company's operating cycle? What is the total asset turnover? What is the times
interest earned ratio? What is the debt-to-equity ratio at the end of this year?
Markus Company's common stock sold for $2.75 per share at the end of this year. The company paid a
common stock dividend of $0.55 per share this year. It also provided the following data excerpts from this
year's financial statements:
Ending
Balance
Beginning
Balance
Cash
Accounts receivable
Inventory
Current assets
Total assets
Current liabilities
Total liabilities
Common stock, $1 par value
Total stockholders' equity
Total liabilities and stockholders' equity
Sales (all on account)
Cost of goods sold
Gross margin
Net operating income
Interest…
Suppose a company has had the historic sales figures shown below. What would be the forecast for next years sales using the average approach?
Chapter 22 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 22 - Prob. 1QCh. 22 - Prob. 2QCh. 22 - Is it true that if a firm calculates its days...Ch. 22 - Firm A had no credit losses last year, but 1% of...Ch. 22 - Indicate by a (+), (), or (0) whether each of the...Ch. 22 - Cost of Bank Loan On March 1, Minnerly Motors...Ch. 22 - Cost of Bank Loan Mary Jones recently obtained an...Ch. 22 - Del Hawley, owner of Hawleys Hardware, is...Ch. 22 - Gifts Galore Inc. borrowed 1.5 million from...Ch. 22 - Relaxing Collection Efforts The Boyd Corporation...
Ch. 22 - Tightening Credit Terms Kim Mitchell, the new...Ch. 22 - Effective Cost of Short-Term Credit Yonge...Ch. 22 - Monitoring of Receivables
The Russ Fogler Company,...Ch. 22 - Prob. 10PCh. 22 - Prob. 1MCCh. 22 - Prob. 2MCCh. 22 - Prob. 3MCCh. 22 - Prob. 4MCCh. 22 - Prob. 5MCCh. 22 - Prob. 6MCCh. 22 - Prob. 7MCCh. 22 - Assume that it is now July of Year 1 and that the...Ch. 22 - Now assume that it is several years later. The...Ch. 22 - Prob. 10MCCh. 22 - Prob. 11MCCh. 22 - Prob. 12MCCh. 22 - Prob. 13MCCh. 22 - Prob. 14MCCh. 22 - Suppose the firm makes the change but its...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Suppose the company has to revise its estimates because of a downturn in the economy. Unit sales for August, September, and October will be half (50%) of the original estimates. Revise the estimates in cells 1311 through 1313. After this is done, check your forecasted balance sheet. It should still balance! What effect will this new state of affairs have on net income and borrowing? Explain why these items changed.arrow_forwardSuppose the company has just the opposite news and now expects unit sales for August, September, and October to be double (200%) the original estimates. What effect will this have on the company’s net income and borrowing? Explain your findings.arrow_forwardwhat will be the predicted monthly cash deficits and surpluses, and how much short - term financing will the company need in the coming year? what can be inferred from the pattern of cash deficits and surpluses, and the pattern of requirements for short-term financing?arrow_forward
- a) Prepare a projected cash flow statement for the six months ending 30 November that shows the cash balance at the end of each month b) Compute the projected inventories levels at the end of each month for the six months to 30 November c) Prepare a projected income statement for the six months ending 30 November. d) What problems is Newtake Records Ltd likely to face in the next six months? Can you suggest how the business might deal with these problemsarrow_forwardIf a firm has sales of $21,752,000 a year, and the average collection period for the industry is 45 days, what should this firm’s accounts receivable be if the firm is comparable to the industry? Assume there are 365 days in a year. Do not round intermediate calculations. Round your answer to the nearest dollar.arrow_forwardAssume that it is now July of Year 1 and that the brothers are developing projected financial statements for the following year. Further, assume that sales and collections in the first half-year matched the predicted levels. Use the Year-2 sales forecasts shown in the following table to estimate next year’s receivables levels for the end of March and for the end of June.arrow_forward
- Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's accounts receivable. Make the following assumptions: current year's sales are $55,750,000; current year's cost of goods sold is $25,350,000; sales are expected to rise by 25%, The firm's investment in accounts receivable in the current year is $12,600,000. The firm's marginal tax rate is 35%. What is the projection for next year's accounts receivable? $10,320,000 $11,345,000 O $15,750,000 $8,772,000arrow_forwardYour company forecasts that next year's sales will be $67.00 million and the Days Sales Outstanding (DSO) ratio will be 24.71. What is the forecasted accounts receivable for next year? Note: your answer should in millions of dollars.arrow_forwardAlderson Metals is compiling a cash balance projection by quarter for next year. Which one of the following adjustments to this projection will decrease the cumulative surplus? A. Reducing payroll costs from its current projection amount B. Decreasing the accounts receivable period by changing the firm's credit policy effective the first of next year C. Receiving more favorable credit terms from the firm's suppliers D. Increasing the dividend per share on the firm's outstanding common stock E. Refinancing the firm's long-term debt at a lower interest ratearrow_forward
- Will Walmart’s profit margin decrease in the next three years?arrow_forwardWhy is it important for start-up businesses to come up with monthly cash flow projections, especially during first year?arrow_forwardCreate an appropriate graph to show the correlation between the total revenuegenerated by Tesco and the number of its stores over the last recorded fiveyears?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College PubExcel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Financial Projections for Startups Basic Walkthrough; Author: Mike Lingle;https://www.youtube.com/watch?v=7avegQF4dxI;License: Standard youtube license