1) Sale = $5,000,000, COGS = 35% of sales, DIH = 25 Days, Credit terms from...
1) Sale = $5,000,000, COGS = 35% of sales, DIH = 25 Days, Credit terms from supplier = Net 35 (DPO), Credit terms to customer = Net 30 (DSO). Interest rate is 6%.
Calculate the NPV of sales.
2) Use the following information to calculate these various solvency measures:
a) NWC,
b) WCR,
c) Current ratio,
d) Quick ratio
e) Cash Conversion Efficiency (CCE)
f) Days cash held (DCH)
-Cash $150000
-Current asset $900,000
-Current liability $700,000
-Inventory $350,000Receivable $250,000
-Payable $300,000
-Sales 1,800, 000
-COGs =40% of sales
-Cash flow from operation 130, 000
3) You are looking at the liquidity level of ABC firm. Its Cash on hand is $250,000, unused credit lines is $500,000, Average daily cash flow is $1,000,000, and Standard deviation (σ) of daily cash flow is $1,500,000.
-Calculate and explain the Lambda based on the information.
Homework Answers
| Sale | 5000000 | |
| COGS | 35% of Sale | 1750000 |
| Operating Income | Sale-COGS | 3250000 |
| Interest | 6% of O.I. | 195000 |
| NPV | O.I + Interest | 3445000 |
| 1). | NWC=Current Asset -Current Liablity | ||
| 900000-700000 | 200000 | ||
| 2). | Current ratio =Current Asset/Current Liablity | 900000/700000 | 1.286 |
| 3). | Quick ratio=(Current Asset-Inventory)/current liability | (900000-350000)/700000 | 0.79 |
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1) Sale = $5,000,000, COGS = 35% of sales, DIH = 25 Days, Credit
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