My grade was 90/130 but I can resubmit1.10/102.10/103.10/104.10/105.10/106.10/107.7.5/108.10/109.10/1010.2.5/1011.0/1012.0/1013.0/10
Please fix number 7, 10, 11, 12, and 13
FIN 3150 Fall 2019 Assignment 1 – Examining a company’s cash cycle and working capital needs Due: 4:00 pm, August 26, 2019 Do this assignment individually. Select a company that has non-zero inventory, accounts receivable and accounts payable on its balance sheet. (That means you will not be using a financial institution for this assignment – or probably any other assignment in this course – and will likely use a company that generates revenue from sales rather than service, and preferably sales to other businesses rather than retail.) Use the financial statements for the two most recent years to answer the following. 1. From the company’s most recent financial statements, find the company’s a. total revenue b. total cost of revenue c. average cash (two year average) d. average accounts receivable (two year average) e. average inventory (two year average) f. average accounts payable (two year average) 2. Calculate the company’s net operating working capital 3. Determine the company’s daily dollar volume of sales 4. Determine the company’s daily cost of goods sold 5a. Calculate the company’s inventory turnover b. Calculate the company’s average inventory period (days sales in inventory) 6a. Calculate the company’s accounts receivable turnover b. Calculate the company’s average collection period 7a. Calculate the company’s accounts payable turnover b. Calculate the company’s average payment period. 8a. Calculate the company’s operating cycle b. Explain what that number means 9a. Calculate the company’s cash cycle b. Explain what that number means 10a. If the company’s annual cost to carry one dollar of inventory is ten cents (i.e., 10%), what is the company’s annual dollar cost to carry inventory for the most recent year? b. If the company’s cost of borrowing funds to carry accounts receivable is 6%, what is the annual dollar cost of carrying accounts receivable for the most recent year? c. If purchasing on credit allows the company to save 6%, what is the company’s annual dollar savings from paying on account rather than in cash for the most recent year? 11. What is the total annual cost associated with the company’s cash cycle for the most recent year? 12. Calculate the annual dollar savings the company would realize if it a. reduces its inventory holding period by 2%. b. reduces its average collection period by 2%. c. increases the average time to payment of its accounts payable by 1%. d. What would be the aggregate annual cost savings if the company was able to achieve all three of the changes above? 13. Assuming the required return on the company’s stock is 16%, how would the value of the company change if the company’s annual net cash flow were to increase by the amount determined in 12d in perpetuity? LiberMan Int (Pvt) Ltd. Examining a company’s cash cycle and working capital needs Sr.No. Description 2019 $ 1. Find The Company’s: A: Total Revenue 118,086 B: Total Cost of Revenue 48,004 C: Avg Cash (2 Year Avg) 174,591 D: Avg Accounts Receivable (2 Year Avg) 5,502 E: Avg Inventory (2 Year Avg) 8,703 F: Avg Accounts Payable (2 Year Avg) 4,351 2. Calculate the company’s net operating working capital 2019 $ Accounts Receivable 5,904 Inventory 9,601 Accounts Payable 4,800 Net Operating Working Capital (NOWC) 10,705 3. Determine the company’s daily dollar volume of sales 2019 $ Total Sales Volume 118,086 No. of Days 365 Daily Dollar volume of Sales: 323.52 4. Determine the company’s daily cost of goods sold 2019 $ Total Cost of Goods Sold 48,004 No. of Days 365 Daily Cost of Goods Sold: 131.52 $ 5. Calculate The Company’s: A: Inventory Turnover: 2019 $ Cost of Goods Sold 48,004 Avg Inventory 8,703 Inventory Turnover: 5.52 B: Avg Inventory Period (Days Sales In Inventory): 2019 $ No. of Days in a period 365 Inventory Turnover 5.52 Avg Inventory Period (Days Sales In Inventory): 66.17 6. Calculate The Company’s: A: Accounts Receivable Turnover: 2019 $ Credit Sales (Asuming that the total sales is credit) 118,086 Avg Accounts Receivable 5,502 Accounts Receivable Turnover: 21.46 B: Avg Collection Period: 2019 $ Avg Accounts Receivable 5,502 No. of Days 365 Net Sales 118,086 Avg Collection Period: 17.01 7. Calculate The Company’s: A: Accounts Payable Turnover: 2019 $ Ending Inventory 9,601 Opening Inventory 7,805 Remaining Inventory 1,796 Cost of Goods Sold 48,004 Purchases 49,800 Accounts Payable Turnover: 8.85 B: Avg Payment Period: 2019 $ No. of Days 365 Accounts Payable Turnover 11.45 Avg Payment Period: 41.24 8. Calculate The Company’s Operating Cycyle: A: Operating Cycle: 2019 $ The Days Sales In Inventory 66.17 The Avg Collection Period 17.01 Operating Cycle 83.18 B: The operating cycle is the average period of time required for a business to make an initial outlay of cash to produce goods, sell the goods, and receive cash from customers in exchange for the goods. "Thus this number 83.18 is showing us that the company will take 83.18 Days in converting it`s inventories into cash" 9. Calculate The Company’s: A: Cash Cycle: 2019 $ DSI= Avg Inventory/Cost of Goods Sold X 365 66.17 DSO= Avg Accounts Receivable/Revenue Per Day 17.01 DPO= Avg Accounts Payable/Cost of Goods Sold per day 33.08 Cash Cycle (DSI+DSO-DPO): 50.10 B: The cash cycle (CC) is a metric that expresses the time (measured in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales. "It is showing us that the company will take 50.10 days of working capital to turn purchased inventory into Cash" 10. Find Out: A: If the company’s annual cost to carry one dollar of inventory is ten cents (i.e., 10%), what is the company’s annual dollar cost to carry inventory for the most recent year? 2019 $ Recent Inventory Value 9,601 Annual Cost to carry one dollar of inventory 10% Annual Carrying Cost: 960 B: If the company’s cost of borrowing funds to carry accounts receivable is 6%, what is the annual dollar cost of carrying accounts receivable for the most recent years? 2019 $ Recent Account Receivable Value 5,904 Annual Cost to carry an account receivable 6% Annual Carrying Cost: 354.24 C: If purchasing on credit allows the company to save 6%, what is the company’s annual dollar saving frompaying on account rather than in cash for the most recent year. 2019 $ Recent Account Payable Value 4800 Annual Cost to carry one dollar of inventory 6% Annual Carrying Cost: 288 11. Find Out: What is the total annual cost associated with the company’s