公司理財9e課后習(xí)題及答案cha

1、year). For larger firms, the interest rate is often tied to the London Interbank Offered Rate (LIBOR) or to the banks cost of funds, rather than the prime rate. Midsized and smaller firms often are required to keep compensating balances in the bank.Compensating balances are deposits the firm keeps w

2、ith the bank in low-interest or non-interest-bearings. Compensating balances are commonly on the order of 2 to 5 percent of the amountused. By leaving these funds with the bank without receiving interest, the firm increases the effective interest earned by the bank on the line of credit. For example

3、, if a firm borrowing $100,000 must keep$5,000 as a compensating balance, the firm effectively receives only $95,000. A stated interest rate of 10 percent implies yearly interest payments of $10,000 (=$100,000 × .10). The effective interest rate is 10.53 percent (=$10,000/$95,000).Secured Loans

4、Banks and other finance companies often require security for a loan. Security for short-term loansusually consists ofs receivable or inventories.Unders receivable finng, receivables are either assigned or factored. Underassignment, the lender not only has a lien on the receivables but also has recou

5、rse to the borrower.Factoring involves the sale ofs receivable. The purchaser, who is called a factor, must thencollect on the receivables. The factor assumes the full risk of default on bads.As the name implies, an inventory loan uses inventory as collateral. Some common types of inventory loans ar

6、e:1.Blanket inventory lien: The blanket inventory lien gives the lender a lien borrowers inventories.all the2.Trust receipt: Under this arrangement, the borrower holds the inventory in trust for the lender. The document acknowledging the loan is called the trust receipt. Proceeds from the sale of in

7、ventory are remitted immediately to the lender.3.Field waouse finng: In field waousefinng, apublicwaouse companysupervises the inventory for the lender.Other SourcesA variety of other sources of short-term funds are employed by corporations. The most important of these are the issuance of commercial

8、 paper and fin ng through bankers acceptances. Commercial paper consists of short-term notes issued by large, highly rated firms. Typically, these notes are of short maturity, ranging up to 270 days (beyond that limit the firm must file a registration statement with the SEC). Because the firm issues

9、 these directly and because it usually backs the issue with a special bank line of credit, the rate the firm obtains is often significantly below the prime rate the bank would charge it for a direct loan.A bankers acceptance is an agreement by a bank to pay a sum of money. These agreements typically

10、 arise when a seller sends a bill or draft to a customer. The customers bank accepts this bill and notes the acceptance on it, which makes it an obligation of the bank. In this way a firm that is buyingsomething from ar can effectively arrange for the bank to pay the outstanding bill. Of course, the

11、bank charges the customer a fee for this service.Summary ands1. This chapter introduced the management of short-term finance. Short-term finance involves short-lived assets and liabilities. We traced and examined the short-term sources and uses of cash as they appear on the firms fin al statements.

12、We saw how current assets and current liabilitiesarise in the short-term operating activities and the cash cycle of the firm. From an perspective, short-term finance involves net working capital.ing2.Managing short-term cash flows involves the minimization of costs. The two major costs are carrying

13、costs (the interest and related costs incurred by overinvesting in short-term assets such as cash) and shortage costs (the cost of running out of short-term assets). The objective of managing short-term finance and short-term fin al planning is to find the optimal trade-off between these costs.In an

14、 ideal economy, a firm could perfectly predict its short-term uses and sources of cash, and net working capital could be kept at zero. In the real world, net working capital provides a buffer that lets the firm meet its ongoing obligations. The fin al manager seeks the optimal level of each of the c

15、urrent assets.3.4.The final manager can use the cash budget to identify short-term final needs. The cashbudget tells the manager what borrowing is required or what lending will be possible in the short term. The firm has a number of possible ways of acquiring funds to meet short-term shortfalls, inc

16、luding unsecured and secured loans.Concept Questions1.2.3.Operating Cycle What are some of the characteristics of a firm with a long operating cycle?Cash Cycle What are some of the characteristics of a firm with a long cash cycle?Sources and Uses For the year just ended, you have gathered the follow

17、ing information about the Holly Corporation:.5.A $200 dividend was paid.s payable increased by $500.Fixed asset purchases were $900. Inventories increased by $625.Long-term debt decreased by $1,200.Label each as a source or use of cash and describe its effect on the firms cash balance.Cost of

18、 Current Assets Grohl Manufacturing, Inc., has recently installed a just-in-time (JIT) inventory system. Describe the effect this is likely to have on the companys carrying costs, shortage costs, and operating cycle.Operating and Cash Cycles Is it possible for a firms cash cycle to be longer than it

19、s operating cycle? Explain why or why not.Shortage Costs What are the costs of shortages? Describe them.Reasons for Net Working Capital In an ideal economy, net working capital is always zero.Why might net working capital be positive in a real economy?Use the following information to answer Question

20、s 812: Last month, BlueSky Airline announced that it would stretch out its bill payments to 45 days from 30 days. The reason given was that the company wanted to “control costs and optimize cash flow.” The increased payables.period will be in effect for all of the companys 4,000rs.8.Operating

21、 and Cash Cycles What impact did this change in payables policy have on BlueSkys operating cycle? Its cash cycle?9.10.Operating and Cash Cycles What impact did the announcement have on BlueSkysrs?Corporate Ethics Is it ethical for large firms to unilaterally lengthen their payables periods,particula

22、rly when dealing with smallerrs?11.Payables Period Why dont all firms simply increase their payables periods to shorten their cash cycles?Payables Period BlueSky lengthened its payables period to “control costs and optimize cash flow.” Exactly what is the cash benefit to BlueSky from this change?12.

23、Questions and Problems connectBASIC (Questions 111)1.Changes in the CashIndicate the impact of the following corporate actions on cash,using the letter I for an increase, D for a decrease, or N when no change occurs...5.A dividend is paid with funds received from a sa

24、le of debt. Real estate is purchased and paid for with short-term debt. Inventory is bought on credit.A short-term bank loan is repaid. Next years taxes are prepaid.Preferred stock is redeemed.Sales areon credit.Interest on long-term debt is paid.Payments for previous sales are collected.Thes payabl

25、e balance is reduced.A dividend is paid.Productions are purchased and paid with a short-term note.Utility bills are paid.Cash is paid for raw materials purchased for inventory. Marketable securities are sold.2.Cash Equation McConnell Corp. has a book net worth of $10,380. Long-term debt is $7,500. N

26、et working capital, other than cash, is $2,105. Fixed assets are $15,190. How much cash does the company have? If current liabilities are $1,450, what are current assets?Changes in the Operating Cycle Indicate the effect that the following will have on the operating cycle. Use the letter I to indica

27、te an increase, the letter D for a decrease, and the letter N for no change..4.5.Receivables average goes up.Credit repayment times for customers are increased. Inventory turnover goes from 3 times to 6 times.Payables turnover goes from 6 times to 11 times.Receivables turnover goes from 7 tim

28、es to 9 times.6.Payments tors are accelerated.4.Changes in Cycles Indicate the impact of the following on the cash and operating cycles, respectively. Use the letter I to indicate an increase, the letter D for a decrease, and the letter N for no change..5.6.The terms of cash discounts offered

29、 to customers areless favorable.The cash discounts offered byrs are increased; thus, payments areearlier.An increased number of customers begin to pay in cash instead of with credit. Fewer raw materials than usual are purchased.A greater percentage of raw material purchases are paid for with credit.

30、More finished goods are produced for inventory instead of for order.5.Calculating Cash Collections The LitzenbergerCompany hasprojectedthe followingquarterly sales amounts for the coyear:1.s receivable at the beginning of the year are $275. Litzenberger has a 45-day collection period. Calculate cash

31、 collections in each of the four quarters by completing the following:2.3.Rework (a) assuRework (a) assua collection period of 60 days.a collection period of 30 days.6.Calculating Cycles Consider the following fin Corporation:al statement information for the Bulldog IcersCalculate the operating and

32、cash cycles. How do you interpret your answer?Calculating Payments Lewellen Products has projected the following sales for the co year:7.Sales in the year following this one are projected to be 15 percent greater in each quarter.1.Calculate payments tors assuthat Lewellen places orders during each q

33、uarterequal to 30 percent of projected sales forthe next quarter. Assume that the company paysimmediately. What is the payables period in this case?2.3.Rework (a) assuRework (a) assua 90-day payables period.a 60-day payables period.8.Calculating PaymentsThe Thakor Corporations purchases fromrs in a

34、quarter areequal to 75 percent of thenext quarters forecast sales. The payables period is 60 days. Wages,taxes, and other expenses are 20 percent of sales, and interest and dividends are $73 per quarter. No capital expenditures are planned.Here are the projected quarterly sales:Sales for the first q

35、uarter of the following year are projected at $970. Calculate the companys cash outlays by completing the following:9.Calculating Cash Collections The following is the sales budget for Shleifer, Inc., for the first quarter of 2010:Credit sales are collected as follows: 65 percent in the month of the

36、 sale.20 percent in the month after the sale.15 percent in the second month after the sale.Thes receivable balance at the end of the previous quarter was $79,800 ($57,200 ofwhich were uncollected December sales).1.2.3.Compute the sales for November. Compute the sales for December.Compute the cash co

37、llections from sales for each month from January through March.10.Calculating the Cash Budget Here are some important figures from the budget of Cornell, Inc., for the second quarter of 2010:The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will

38、 be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase.In March 2010, credit sales were $336,000, information, complete the following cash budget:andcreditpurchases were $249,600

39、. Using this11.Sources and Uses Here are the most recent balance sheets for Country Kettles, Inc. Excluding accumulated depreciation, determine whether each item is a source or a use of cash, and the amount:INTERMEDIATE (Questions 1215)12.Cash Budgeting The sales budget for your company in the coyea

40、r is based on a 20percent quarterly growth rate with the first-quarter sales projection at $150 million. In addition tothis basic trend, the seasonal adjustments for the four quarters are 0, $16, $8, and $21 million, respectively. Generally, 50 percent of the sales can be collected within the quarte

41、r and 45 percent in the following quarter; the rest of the sales are bad debt. The bad debts are written off in thesecond quarter after the sales are. The beginnings payable balance is $72 million.Assuall sales are on credit, compute the cash collections from sales for each quarter.13.Calculating th

42、e Cash Budget Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows:Sales for the first quarter of the year after this one are projected at $240 million. receivable at the beginning of the year were $68 million. Wildcat has a 45-day collection period.sWildcats purcha

43、ses fromrs in a quarter are equal to 45 percent of the next quartersforecast sales, andrs arenormally paid in 36 days. Wages, taxes, and other expenses runabout 30 percent of sales. Interest and dividends are $12 million per quarter.Wildcat plans a major capital outlay in the second quarter of $80 m

44、illion. Finally, the company started the year with a $64 million cash balance and wishes to maintain a $30 million minimum balance.1.Complete a cash budget for Wildcat by filling in the following:2.Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 3 percent per quart

45、er, and can invest any excess funds in short-term marketable securities at a rate of 2 percent per quarter. Prepare a short-term fin al plan by filling in the following schedule. What is the net cash cost (total interest paid minus total investment income earned) for the year?14.Cash Management Poli

46、cy Rework Problem 13 assuthe following:1.2.Wildcat maintains a minimum cash balance of $50 million.Wildcat maintains a minimum cash balance of $10 million.Based on your answers in (a) and (b), do you think the firm can boost its profit by changing its cash management policy? Should other factors be

47、considered as well? Explain.Short-Term Finance Policy Cleveland Compressor and Pnew York Pneumatic are competing manufacturing firms. Their final statements are printed here..How are the current assets of each firm financed?Which firm has the larger investment in current assets? Why?Which fi

48、rm is more likely to incur carrying costs, and which is more likely to incur shortage costs? Why?S&P Problems1.Cash and Operating Cycles Find the most recent final statements for Dell Computer(DELL) and Boeing (BA). Calculate the cash and operating cycles for each company for the most recent yea

49、r. Are the numbers similar for these companies? Why or why not?2.Cash and Operating Cycles Download the most recent quarterly fin al statements for Wal- Mart (WMT). Calculate the operating and cash cycles for Wal-Mart over each of the last four quarters. Comment on any changes in the operating or ca

50、sh cycles over this period.MiniCase:KEAFERMANUFACTURINGWORKINGCAPITALMANAGEMENTYou have recently been hired by Keafer Manufacturing to work in its established treasury department. Keafer Manufacturing is a small company that produces highly customized cardboard boxes in a variety of sizes for differ

51、ent purchasers. Adam Keafer, the owner of the company, works primarily in the sales and production areas of the company. Currently, the company basically puts all receivables in one pile and all payables in another, and a part-time bookkeeper periodically comes in and attacks the piles. Because of t

52、his disorganized system, the finance area needs work, and thats what youve been brought in to do.The company currently has a cash balance of $149,500, and it plans to purchase new machinery inthe third quarter at a cost of $260,000. The purchase of the machinery will bewith cash becauseof the discou

53、nt offered for a cash purchase. Adam wants to maintain a minimum cash balance of$90,000 to guardunforeseen contingencies. All of Keafers sales to customers and purchases with credit, and no discounts are offered or taken.fromrs areThe company had the following sales each quarter of the year just ended:After