  (Solution) 16-1 Sales = \$10,000,000; S/I = 2 . Inventory = S/2 = = \$5,000,000. If S/I = 5 , How Much Cash Is Freed Up? Inventory = S/5 = = \$2,000,000. Cash | Snapessays.com

(Solution) 16-1 Sales = \$10,000,000; S/I = 2 . Inventory = S/2 = = \$5,000,000. If S/I = 5 , how much cash is freed up? Inventory = S/5 = = \$2,000,000. Cash

I need these solutions converted into excel... Thanks!16-1

Sales = \$10,000,000; S/I = 2

×

.

Inventory = S/2

=

= \$5,000,000.

If S/I = 5

×

, how much cash is freed up?

Inventory = S/5

=

= \$2,000,000.

Cash freed = \$5,000,000 – \$2,000,000 = \$3,000,000.

16-2

DSO = 17; Credit Sales/Day = \$3,500; A/R = ?

DSO =

17 =

A/R = 17

×

\$3,500 = \$59,500.

16-3

Nominal cost of trade credit =

= 0.0309

×

24.33 = 0.7526 = 75.26%.

Effective cost of trade credit = (1.0309)

24.33

– 1.0 = 1.0984 = 109.84%.

16-4

Effective cost of trade credit

= (1 + 1/99)

8.11

– 1.0

= 0.0849 = 8.49%.

16-5

Net purchase price of inventory = \$500,000/day.

Credit terms = 2/15, net 40.

\$500,000

×

15 = \$7,500,000.

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