1. LongBoard Products has lowered its prices by 10% over the year and this year annual sales increased by 20% to $4,461,072.Some of the new customers (retail stores) are taking a lot longer to pay and 7% are past due on their invoices.As a result, the accounts receivable has increased from $720,000 at the beginning of the year to $820,000 at this year-end.To help finance this delay, Furniture Wholesalers has slowed its payments to suppliers leaving a total accounts payable period of 87 days. The company turns over its inventory 4.3 times per year.What is the length of the firm's operating cycle?
2. Bee's Honey currently has an inventory turnover of 28.6 and a receivables period of 34.4 days. US bees were very productive last year and the price of imported honey lowered the Cost of Goods Sold by 10% to a total of $993,600 this year.Average Accounts Payable was $92,000.How many days are in the cash cycle?
3. SandBar Beverages typically collects its receivables from over 250 liquor stores with an average of 28 days.They can't wait to receive the cash so they decide to factor all receivables immediately at a discount of 1.12 percent. What is the firm's effective cost of borrowing assuming all accounts are collected in full?
4. LongBoard Products writes 57 checks a day with an average amount of $289 each. These checks generally clear the bank in 2.7 days. In addition, the firm generally receives an average of $20,900 a day in checks that are deposited immediately. Deposited funds are available in an average of 1.5 days. What is the firm's net float?
5. LongBoard Products is really needing cash flow and also wants to increase sales by implementing a flexible policy for managing working capital.The CFO and Chief Marketing Officer agree that credit terms of 2/5, net 30 are about all they can do. What effective annual interest rate does LongBoard earn when a customer does not take the discount?
6. Rock Bottom Carpets sells 1,640 carpets a year at an average price per carpet of $3,100. The carrying cost per unit is $218.40. The fixed order cost is $78 per order. The carpets are sold out before they are restocked. What is the economic order quantity (EOQ)?

Answer rating: 100% (QA)

1 Length of the firms operating cycle for LongBoard Products Inventory conversion period 365 43 8488 ... View the full answer