Grumpy Co sells stress-relieving toys and, surprisingly perhaps, is happy with the progress it is making...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Grumpy Co sells stress-relieving toys and, surprisingly perhaps, is happy with the progress it is making financially as it is growing and is profitable. There are issues however about cash flow. An extract from the accounting records for the most recent financial period (a year) is as follows: Credit sales Trade receivables Other receivables Credit purchases Trade payables Closing Inventory $480,000 $85,000 $12,000 $212,000 $30,000 $52,000 (a) Calculate the working capital cycle from the information given in the table above. (8) (b) When developing working capital management strategies, finance managers must ensure a balance between profitability and liquidity. Discuss. (4) (c) Explain the concept of creditworthiness and how it applies to receivables management. Identify two ways in which a business can determine customer creditworthiness. (d) How can a business use debt factoring to support its liquidity and cash flow. Is this a suitable option to use regularly? (4) (4) Grumpy Co sells stress-relieving toys and, surprisingly perhaps, is happy with the progress it is making financially as it is growing and is profitable. There are issues however about cash flow. An extract from the accounting records for the most recent financial period (a year) is as follows: Credit sales Trade receivables Other receivables Credit purchases Trade payables Closing Inventory $480,000 $85,000 $12,000 $212,000 $30,000 $52,000 (a) Calculate the working capital cycle from the information given in the table above. (8) (b) When developing working capital management strategies, finance managers must ensure a balance between profitability and liquidity. Discuss. (4) (c) Explain the concept of creditworthiness and how it applies to receivables management. Identify two ways in which a business can determine customer creditworthiness. (d) How can a business use debt factoring to support its liquidity and cash flow. Is this a suitable option to use regularly? (4) (4)
Expert Answer:
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
Students also viewed these finance questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Jogger 1 is travelling east at 6 . 5 m / s and has a mass of 8 2 kg . Jogger 2 is travelling north at 5 . 8 m / s and has a mass of 5 4 . 5 kg . One of the joggers has their head down and doesnt see...
-
At July 31, Planter Company has this bank information: cash balance per bank $7,291, outstanding checks $762, deposits in transit $1,350, and a bank service charge $40. Determine the adjusted cash...
-
Williams Incorporated produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers...
-
Refer to the information in Exercise 16-12. Prepare a process cost summary using the FIFO method. (Round cost per equivalent unit calculations to two decimal places.) Data From Exercise 16-12 The...
-
Dousmann Corp.'s sales slumped badly in 2014. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 500,000 units of...
-
3. A function f has the values shown below: x 1 1.25 1.5 1.75 f(x) 10 8 7 6 a. Use Midpoint rule to approximate f(x)dx b. Use Simpson's rule to approximate f(x)dx 25
-
What are the general contraindications to the use of a contact lens for optical purposes ?
-
Consider a list of 8 real numbers: 20, 40, 10, 50, 80, 40, 60, 30. Compute the Fourier coefficients Fo and F, using the DFT. Repeat (a) using the FFT. Verify that you get the same results as above....
-
On January 1, 2023, Vin Diesel Inc purchases a fleet of six vehicles for $50,000 each. They pay cash for the purchase. Vehicles have zero salvage value for depreciation calculations. Vin Diesel...
-
Yates Control System (YCS): Will the Bank Make the Loan? (available in Course-Pack). Taking the role of the decision-maker, briefly discuss the following: YCS's past financial performance. What...
-
The balance sheet of Perez Printing shows $ 6 8 0 in inventory, $ 2 , 1 4 0 in fixed assets, $ 2 1 0 in accounts receivables, $ 2 5 0 in accounts payable, and $ 8 0 in cash. How much net working...
-
How to answer this question for an Administration Clerk and Licensing and Statistics Officer position? Do you have experience providing financial support services in one (1) or more of the following...
-
In a norm room, four or you are discussing about buying a new clock. Each of you has $20 in your pocket. Sup-pose that a clock costs $40, but the benefit of having a clock in the room is $6 for each...
-
MgO prevents premature evaporation of Al in a furnace by maintaining the aluminum as Al2O3. Another type of matrix modifier prevents loss of signal from the atom X that readily forms the molecular...
-
Select an industrially developed country (perhaps Japan or a European country) and a relatively less developed country (perhaps a Latin American or African country). Contrast the relative importance...
-
This company, located in Seattle, Washington, in the United States, is a distributor of engineering equipment and machine tools. The company receives an order from the Matens Company in Portugal for...
-
Explain the meaning of cultural universals. Do these provide universal guides to behaviour in all societies? How can the international marketer use these universals? Explain.
-
Nina Lopez and Matt ORourke have been trying to raise capital to expand their growing chain of cupcake shops, Treasure Cup. They make a full range of traditional cupcakes, but they found immediate...
-
Wish You Wood is a toy boutique located in the main shopping strip of a resort town near Piney Lake. People who own cabins near the lake or come to visit the local state park enjoy browsing through...
-
Alyssia Franklin is a marketing manager for Or Earth Skin Care. Four years ago, when she was hired to help with promotional campaigns, she was thrilled because she loved Or Earths products. Above all...
Study smarter with the SolutionInn App