EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 4, Problem 8P
a)
Summary Introduction
To determine: Additional financing needed for 2017.
b)
Summary Introduction
To determine: Additional financing needed for 2017.
c)
Summary Introduction
To determine: Additional financing needed for 2017.
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You are a financial Manager of Chevron Corp. You need to assess the effectiveness of
working capital management of the company for 2018 using the following data. What is the
2018 Receivable turnover?
2017 Account Receivable = 15,353 000
2018 Account Receivable = 15.050,00O
2017 Inventory = 5,585.000
2018 Inventory = 5 704.00O
2017 Accounts Payable= 14 565 00I
2018 Accounts Payable = 13 953 000
2017 Sales 134,674 000
2018 Sales 158.902 000.
2017 Cost of Sales = 95 114.000
2018 Cost of Sales = 113 997 000
2017 Purchases= 95 114 000
2018 PurchaSes = 123 435 000
Given the following information, calculate for 2016 the number of days of working capital financing the firm will need to obtain from other sources?
(i.e., show the calculations of the Days Outstanding (including embedded Turnover ratios) for each of Accounts Receivable, Inventory, and Accounts Payable, as well as the intermediate calculation of Purchases used to calculate Days Outstanding for Payables, and finally, the number of days of external working capital financing required.
Which of the following statements is correct?
A. a. Since accounts payable and accruals must eventually be paid, as these accounts increase, AFN also increases.
B. b. Suppose a firm is operating its fixed assets below 100 percent capacity but is at 100 percent with respect to current assets. If sales grow, the firm can offset the needed increase in current assets with its idle fixed assets capacity.
C. c. If a firm retains all of its earnings, then it will not need any additional funds to support sales growth.
D. d. Additional funds needed are typically raised from some combination of notes payable, long-term bonds, and common stock. These accounts are nonspontaneous in that they require an explicit financing decision to increase them.
E. e. All of the statements above are false.
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EBK CONTEMPORARY FINANCIAL MANAGEMENT
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