Question

5.

Suppose your firm receives a $4.19 million order on the last day of the year. You fill the order with $1.82 million worth of inventory. The customer picks up the entire order the same day and pays $1.16 million upfront in​ cash; you also issue a bill for the customer to pay the remaining balance of $3.03 million within 40 days. Suppose your​ firm's tax rate is 0% ​(i.e., ignore​ taxes). Determine the consequences of this transaction for each of the​ following:

a. Revenues b. Earnings c. Receivables

d. Inventory e. Cash

a. Revenues will ____ by $____ million. (Select from the​ drop-down menu and round to two decimal​ places.)

b. Earnings will ____ by $____ million. (Select from the​ drop-down menu and round to two decimal​ places.)

c. Receivables will ____ by $____ million. (Select from the​ drop-down menu and round to two decimal​ places.)

d. Inventory will ____ by $____ million. (Select from the​ drop-down menu and round to two decimal​ places.)

e. Cash will ____ by $____ million. (Select from the​ drop-down menu and round to two decimal​ places.)

Answer 1

15 A 16 B REVENUE WILL INCREASE BY $ 4.19 MILLION EARNIG WILL INCREASE BY $ 2.37 MILLION =SALE-COST OF INVENTORY -4.19-1.82=2.37 RECEIVABLE WILL INCRESE BY $3.03 MILLION 19 C 20 21 D INVENTORY WILL DECREASE BY $ 1.82 MILLION 22 23 E CASH WILL INCREASE BY $ 1.16 MILLION

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