Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 26, Problem 16P
a)
Summary Introduction
To determine: The average number of inventory days outstanding for O Incorporation.
Introduction:
The average number of days a company can hold its stock in a business is termed as inventory days.
b)
Summary Introduction
To determine: The amount of investment should the company reduce in inventory.
Introduction:
Average inventory is the medium of the inventories during a particular period.
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Happy Valley Homecare Suppliers, Incorporated (HVHS), had $11.7 million in sales in 2015. Its cost of goods sold was $4.68 million, and its average inventory balance was $1.84 million.
a. Calculate the average number of days inventory outstanding ratios for HVHS.
b. The average number of inventory days in the industry is 73 days. By how much must HVHS reduce its investment in inventory to improve its inventory days to meet the industry?
(Hint: Use a 365-day year.)
a. Calculate the number of days inventory outstanding ratios for HVHS.
The number of inventory days outstanding is
days. (Round to two demical places.)
b. The average number of inventory days in the industry is 73 days. By how much must HVHS reduce its investment in inventory to improve its inventory days to meet the industry?
To match the industry average number of inventory days, HVHS would reduce its inventory by $ million. (Round to three decimal place.)
Tech Company is a medium-sized consumer electronics retailer. The company reported $155,000,000 in revenues for 2007 and $110,050,000 in Costs of Goods Sold (COGS). In the same year, Tech Co. held an average of $16705510in inventory.
Inventory cost at Tech Co. is 27 percent per year. What is the per unit inventory cost ($) for an MP3 player sold at $46? Assume that the margin corresponds to the retailer’s average margin.
Charlie’s Cycles Inc. has $110 million in sales. The companyexpects that its sales will increase 5% this year. Charlie’s CFO uses a simple linearregression to forecast the company’s inventory level for a given level of projected sales.
On the basis of recent history, the estimated relationship between inventories and sales (inmillions of dollars) is as follows:Inventories = $9 + 0.0875(Sales)Given the estimated sales forecast and the estimated relationship between inventories andsales, what are your forecasts of the company’s year-end inventory level and its inventoryturnover ratio?
Chapter 26 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 26.1 - What is the firms cash cycle? How does it differ...Ch. 26.1 - How does working capital impact a firms value?Ch. 26.2 - Prob. 1CCCh. 26.2 - Prob. 2CCCh. 26.3 - Prob. 1CCCh. 26.3 - Prob. 2CCCh. 26.4 - What is accounts payable days outstanding?Ch. 26.4 - What are the costs of stretching accounts payable?Ch. 26.5 - What are the benefits and costs of holding...Ch. 26.5 - Prob. 2CC
Ch. 26.6 - Prob. 1CCCh. 26.6 - Prob. 2CCCh. 26 - Prob. 1PCh. 26 - Prob. 2PCh. 26 - Aberdeen Outboard Motors is contemplating building...Ch. 26 - Prob. 4PCh. 26 - Prob. 5PCh. 26 - Prob. 6PCh. 26 - The Fast Reader Company supplies bulletin board...Ch. 26 - Prob. 8PCh. 26 - Prob. 9PCh. 26 - Prob. 10PCh. 26 - The Mighty Power Tool Company has the following...Ch. 26 - What is meant by stretching the accounts payable?Ch. 26 - Prob. 13PCh. 26 - Your firm purchases goods from its supplier on...Ch. 26 - Use the financial statements supplied on the next...Ch. 26 - Prob. 16PCh. 26 - Which of the following short-term securities would...
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