(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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This question was answered on: May 23, 2022

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