ABMF4024 Business Fund

Tutorial almost eight Answer

3 December 2010

Question 1

The cash alteration cycle may be the length of time funds are tied up in seed money, or the period of time between paying for working capital and collecting funds from the sale for the working capital. Holding other things constant, in the event you reduce the CCC you will be reducing the quantity of funds tangled up. These cash have a cost; therefore , a decrease in funds is going to lower the firm t costs and therefore raise it is profitability. In this article we have produced an assumption that you can lessen working capital damaging sales.

Problem 2

Once most of us utilize the term funds, we mean currency (paper money and coins) plus bank demand deposits. However , when corporate and business treasurers make use of the term, they generally mean foreign currency and require deposits in addition very safe, highly liquid marketable securities that can be sold quickly in a expected price and therefore be converted to bank deposits. Therefore , funds as reported on the stability sheets generally includes short-run securities, which are also called money equivalents.

Issue 3

Equipment 1) Use a lockbox 2) Insist on cable transfer coming from customers 3) Synchronize inflows and outflows 4) Use a remote disbursement account 5) Reduce need for safety inventory of cash my spouse and i. Increase forecast accuracy Techniques 1) Outlook cash inflows, outflow, and ending funds balances 2) Used to program loans necessary or funds available to make investments 3) Can be daily, weekly or month to month forecast Monthly for actual planning and daily intended for actual cash supervision

ii. Carry marketable securities iii. Negotiable a credit line

Question some

Goals of inventory supervision 1) Lessen inventory price 2) Ensure u have sufficient inventory to your company and customer requirements Inventory Control System 1) Just-In-Time System 2) Electronic Inventory System 3) DASAR System 4) Outsourcing

ABMF4024 Business Fund

Tutorial almost 8 Answer

3 December 2010

Question 5

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Question 6

Sales sama dengan $15, 000, 000; Inventory = $2, 000, 500; A/R = $3, 000, 000; A/P = $1, 000, 1000; COGS sama dengan 0. 8(Sales); Int erest on bank loan = 8%; CCC =? CCC sama dengan Inventory conversion period & Average collection period Payables deferral period. Inventory alteration period Products on hand Cost of products sold every day $2, 1000, 000 = [(0. 8)($15, 1000, 000)]/365

=

=

$2, 500, 000 $32, 876. 7123 Receivable h Sales/365

= 60. 83 days. Normal collection period = =

$3, 500, 000 $15, 000, 000 /365

sama dengan 73 days and nights. Payables deferment period

Payables Cost of products sold/365 $1, 000, 1000 = $32, 876. 7123

=

sama dengan 30. forty two days. CHAOS COMPUTER CLUB = sixty. 83 & 73 35. 42 sama dengan 103. forty one days. installment payments on your Lower arrays and receivables by 10% each and increase payables by 10%. Sales and COGS continue to be the same. Inventory = $2, 000, 1000 v 0. 9 = $1, 800, 000. A/R = $3, 000, 500 v zero. 9 sama dengan $2, seven hundred, 000. A/P = $1, 000, 500 v 1 . 1 = $1, 90, 000. Determine new CCC: Inventory conversion period = $1, 800, 000 $32, 876. 7123

= fifty four. 75 times.

ABMF4024 Business Finance

Article 8 Solution

$2, seven-hundred, 000 $15, 000, 000 /365

3 December 2010

Average collection period

sama dengan

= sixty five. 70 days and nights. Payables deferment period sama dengan

$1, 75, 000 $32, 76. 7123

= 33. 46 days. New CCC = fifty four. 75 + 65. seventy 33. 46 = 86. 99 days and nights §87 times.

Question six

Annual product sales RM50, 735, 000 Inventory level RM15, 012, 500 Account receivable balance exceptional RM10, 008, 000 Payable deferral period 30days

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‡…‡‹˜ƒ„Ž‡• —ƒŽƒŽ‡• †ƒ›•

†ƒ›•

Annual product sales

RM50, 735, 000 Following lowered inventory and airconditioning receivable by simply RM1, 946, 000

Inventory level RM13, 066, 000 Account receivable balance outstanding...

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