Corporate Finance...

School: Acupuncture and Massage College           Price: $10.00 USD

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A three part paper dealing with working capitol management EOQ and External funds..

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Acupuncture and Massage College
Caper Inc.Inventory conversion period60 daysPayables deferral period 30 daysReceivables collection period40 daysnew loan requiredSimple interestCompensating balanceNumber of months150000010%20%41)What is the firm's cash conversion cycle?Cash conversion cycle = Inventory conversion period+ Receivables collection period - ReceivabCash conversion cycle = 60+40-30 = 70 days2)How many times the firm's inventory turnover, if sales are 4,000,000 per year?Sales4,000,000.00A) Inventory tunover can be directly calculated from the inventory conversion periodInventory conversion period = 365/ inventory turnover ratioInventory turnover ratio = 365/ inventory conversion period = 365/60 = 6Inventory turnover = 6 times6.08333B) It can also be calculated from the sales given as follows:Inventory turnover = Sales / Average inventory60 = inventory / 1095810,958.90Inventory657,534.25Turnover6.08Inventory turnover = 6 times3)If sales are all credit sales and amount to $4,000,000 per year, what is the firm's averageCredit sales4,000,000.00Receivables collection period40 daysaverage investment in receivables = Annual credit sales *(Receivables collection period)/3654000000*(40/365)438356.164)What is the nominal interest rate on loan ?new loan required150000050000Simple interest10%Compensating balance20%Number of months4Nominal interestCompensating balance50000300000Disbursed amountNominal interest rate120000012.50%t is th
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