DEVRY FIN 515 Week 7 Problem Set
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FIN 515 Week 7 Problem Set
Chapter 26 (page 903):
Answer the following questions:
What is the difference between a firm’s cash cycle and its operating cycle?
How will a firm’s cash cycle be affected if a firm increases its inventory, all else being
How will a firm’s cash cycle be affected if a firm begins to take the discounts offered
by its suppliers, all else being equal?
The Greek Connection had sales of $32 million in 2012, and a cost of goods sold of
$20 million. A simplified balance sheet for the firm appears below:
Calculate The Greek Connection’s net working capital in 2012.
Calculate the cash conversion cycle of The Greek Connection in 2012.
The industry average accounts receivable days is 30 days. What would the cash
conversion cycle for The Greek Connection have been in 2012 if it had matched the
industry average for accounts receivable days?
Assume the credit terms offered to your firm by your suppliers are 3/5, Net 30.
Calculate the cost of the trade credit if your firm does not take the discount and pays
on day 30.
Chapter 27 (page 925):
Which of the following companies are likely to have high short-term financing
A clothing retailer
A professional sports team
An electric utility
A company that operates toll roads
A restaurant chain
Sailboats Etc. is a retail company specializing in sailboats and other sailing-related
equipment. The following table contains financial forecasts as well as current
(month 0) working capital levels. During which months are the firm’s seasonal
working capital needs the greatest? When does it have surplus cash?