Below are financial statements for Sentec Inc., a distributor of electrical fixtures, for 2008, 2009, and 2010.
a. Compute Sentec Inc.’s working capital requirement (WCR) on December 31, 2008, 2009, and 2010.
b. Prepare Sentec Inc.’s managerial balance sheets on December 31, 2008, 2009, and 2010.
c. Compute Sentec I nc.’s net long-term financing (NLF) and net short-term financing (NSF) on December 31, 2008, 2009, and 2010. Comment on the change in Sentec Inc.’s financing policy. Has it become more conservative? Aggressive? What caused this change?
d. In 2010, firms in the same business sector as Sentec Inc. had an average collection period of thirty days, average payment period of thirty-three days, and inventory turnover of eight days. Suppose that Sentec Inc. had managed its operating cycle like the average firm in the sector. On December 31, 2010, what would its WCR have been? Its managerial balance sheet, NLF, and NSF?
What would have been the effect on its financing strategy?

  • CreatedMarch 27, 2015
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