Questions from Financial Management

Q: The Shamrock Company has a raw materials inventory of $20M,

The Shamrock Company has a raw materials inventory of $20M, which is completely replaced approximately 10 times a year. The Bridgewater Bank is willing to advance financing of 75% of the value of Sha...

Q: Tambourines Inc. collects $12M per year from customers in a

Tambourines Inc. collects $12M per year from customers in a remote location. The average remittance check is $1,200. A lock box system would shorten the overall float on these receipts from 8 days t...

Q: The Hadley Motor Company is located in Florida but has a number

The Hadley Motor Company is located in Florida but has a number of customers in the Pacific Northwest. Sales to those customers are $30 million a year paid in checks that average about $1,500. The c...

Q: Colburn Inc. is considering a lock box system. The firm

Colburn Inc. is considering a lock box system. The firm has analyzed its credit receipts and determined the following: Average time checks are in mail – 3 days Average internal check processing time –...

Q: Bozarth Business Machines (BBM) has analyzed the value of implementing

Bozarth Business Machines (BBM) has analyzed the value of implementing a lock box system. The firm anticipates revenues of $630 million with an average invoice of $1,500. BBM borrows at 12% and has...

Q: The Bailey Machine Tool Company thinks it can increase sales by $

The Bailey Machine Tool Company thinks it can increase sales by $10M by loosening its credit standards somewhat. The firm normally experiences bad debts of about 2% of sales, but marketing estimates t...

Q: Over the past few years, the marketing department at Goldston &

Over the past few years, the marketing department at Goldston & Co has convinced the finance department to permit credit sales to increasingly marginal customers. Revenue has risen as a result, but b...

Q: Financial planning is no longer a problem in business because of the

Financial planning is no longer a problem in business because of the advent of personal computers. Armed with a computer and the appropriate software, anyone can do a plan for even the largest and mos...

Q: The Kranberry Kids Klothing Kompany is in the volatile garment business.

The Kranberry Kids Klothing Kompany is in the volatile garment business. The firm has annual revenues of $250 million and operates with a 30% gross margin on sales. Bad debt losses average 3% of rev...

Q: Sharon’s Sweater Shop orders 5,000 sweaters per year from a

Sharon’s Sweater Shop orders 5,000 sweaters per year from a supplier at a wholesale cost of $65 each. Carrying costs are 22% of cost, and it costs $52 to place and receive an order. How many orders...