fcf 9th edition chapter 18

8/13/2019 FCF 9th Edition Chapter 18

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Chapter 18Problems 1-18

Input boxes in tan

Output boxes in yellow

Given data in blue

Calculations in red

Answers in green

NOTE: Some functions used in these spreadsheets may require thatthe "Analysis ToolPak" or "Solver Add-in" be installed in Excel.

To install these, click on "Tools|Add-Ins" and select "Analysis ToolPakand "Solver Add-In."


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Chapter 18Question 1

Input Area:

Increase IDecrease DNo change N

Output Area:

a. N

b. Nc. N

d. D

e. D

f. D

g. N

h. D

i. I

j. D

k. D

l. Nm. D

n. D

o. I


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Input Area:

Book net worth 10,380$

Long-term debt 7,500$

NWC other than cash 2,105$

Fixed assets 15,190$

Current liabilities 1,450$

Output Area:

Total L&E 19,330$

Cash 2,035$

NWC 4,140$

Current assets 5,590$


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Input Area:


Output Area:

a. I

b. Ic. D

d. N

e. D

f. N


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Input Area:


Output Area:

Cash Cycle Operating Cycle

a. I Ib. I N

c. D D

d. D D

e. D N

f. I I


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Input Area:

Beginning A/R 360$a. Collection period 45b. Collection period 60c. Collection period 30

Q1 Q2 Q3 Q4

Sales 790$ 740$ 870$ 950$

Output Area:

a. 45 -day collection periodQ1 Q2 Q3 Q4

Beginning receivables 360.00$ 395.00$ 370.00$ 435.00$Sales 790.00$ 740.00$ 870.00$ 950.00$Cash collections (755.00)$ (765.00)$ (805.00)$ (910.00)$Ending receivables 395.00$ 370.00$ 435.00$ 475.00$

b. 60 -day collection periodBeginning receivables 360.00$ 526.67$ 493.33$ 580.00$Sales 790.00$ 740.00$ 870.00$ 950.00$Cash collections (623.33)$ (773.33)$ (783.33)$ (896.67)$Ending receivables 526.67$ 493.33$ 580.00$ 633.33$

c. 30 -day collection period

Beginning receivables 360.00$ 263.33$ 246.67$ 290.00$Sales 790.00$ 740.00$ 870.00$ 950.00$Cash collections (886.67)$ (756.67)$ (826.67)$ (923.33)$Ending receivables 263.33$ 246.67$ 290.00$ 316.67$


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Input Area:

Item Beginning Ending

Inventory 9,780$ 11,380$A/R 4,108$ 4,938$A/P 7,636$ 7,927$

Net sales 89,804$COGS 56,384$

Output Area:

Inventory turnover 5.3293Inventory Period 68.4893Receivable turnover 19.8550Receivable period 18.3833Operating cycle 86.87

Payables turnover 7.2459Payables period 50.3733Cash cycle 36.50


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Input Area:

Collection period 32Discount 1.50%

Output Area:

Preiods in a year 11.4063

EAR 18.81%


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Input Area:

Projected sales increase 15%Orders (% of sales) 30%

b. Payables period 90c. Payables period 60

Q1 Q2 Q3

Sales 820$ 860$ 930$

Output Area:

a, The payable period is zero since payment is made immediately.Payment in each period = 0.30 times next period sales

Q1 Q2 Q3

Payment of accounts 258.00$ 279.00$ 297.00$

b. If the payables period is 90 days.Payment of accounts 246.00$ 258.00$ 279.00$

c. If the payables period is 60 days.Payment of account 250.00$ 265.00$ 285.00$


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Q4

990$

Q4

282.90$

297.00$

292.30$


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Input Area:

Purchases (% of sales) 75%Payables period 60 daysExpenses (% of sales) 20%Interest & dividends per Q 90$Projected sales Q(1) next year 1,090$

Q1 Q2

Sales 980$ 930$

Output Area:

With a payables period of 60 days.

Q1 Q2

Payment of accounts 722.50$ 732.50$

Wages, taxes, other expenses 196.00 186.00

Long-term financing expenses 90.00 90.00

Total 1,008.50$ 1,008.50$


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Q3 Q4

1,070$ 1,250$

Q3 Q4

847.50$ 897.50$

214.00 250.00

90.00 90.00

1,151.50$ 1,237.50$


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Input Area:

January February MarchSales budget 235,000$ 260,000$ 295,000$

Credit sales:In the month of the sale 65%In the month of after the sale 20%In the second month after the sale 15%

A/R balance at the end of previous Q 173,000$December uncollected sales 136,000$

Output Area:

a. November sales 246,666.67$

b. December sales 388,571.43$

c. January collections 267,464.29$

Febuary collections 274,285.71$

March collections 279,000.00$


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Input Area:

April May JuneCredit sales 390,000$ 364,000$ 438,000$Credit purchases 147,800 176,300 208,500Cash disbursements Wages, taxes, and expenses 53,800 51,000 78,300

Interest 13,100 13,100 13,100Equipment purchases 87,000 147,000 -

Uncollected credit sales 5%Collected in the month of the sale 35%Collected in the following month 60%Previous month credit sales 245,000$Previous month credit purchases 168,000$Beginning cash 140,000$

Output Area:

April May June

Beginning cash balance 140,000$ 101,600$ 104,100$

Cash receipts

Cash collections from credit sales 283,500 361,400 371,700

Total cash available 423,500$ 463,000$ 475,800$Cash disbursements

Purchases 168,000$ 147,800$ 176,300$

Wages, taxes, and expenses 53,800 51,000 78,300

Interest 13,100 13,100 13,100

Equipment purchases 87,000 147,000 -

Total cash disbursements 321,900$ 358,900$ 267,700$Ending cash balance 101,600$ 104,100$ 208,100$

Sales collections = .35 times current month sales + .60 times previous month sales.


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Chapter 18Problem 12

Input area:

2007 2008

Assets

Cash 38,000$ 36,900$Accounts receivable 87,380 91,680Inventories 76,000 79,670Property, plant, and equipment 183,760 196,480

Less: Accumulated depreciation 57,160 65,350

Total assets 327,980$ 339,380$

Output area:

Cash Source 1,100$

Accounts receivable Use (4,300)$

Inventories Use (3,670)$Property, plant, and equipment Use (12,720)$

Accounts payable Source 2,600$

Accrued expenses Use (810)$

Long-term debt Source 3,000$

Common stock Source 5,000$

Accumulated retained earnings Source 1,610$

Balance Sheet (in $ th


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2007 2008

Liabilities and Equity

Accounts payable 56,300$ 58,900$Accrued expenses 7,850 7,040Long-term debt 32,000 35,000Common stock 20,000 25,000Accumulated retained earnings 211,830$ 213,440$

Total liabilities and equity 327,980$ 339,380$

ousands)


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Input Area:

Line of credit 50,000,000$Interest rate 0.640%Compensating balance 5%

b. Amount borrowed 15,000,000$Months to repay 6

Output Area:

a. Compensating balance amount 2,500,000$Monthly interest amount 320,000$

Amount you can use 47,500,000$Periodic rate 0.6737%

EAR 8.39%

b. Amount to borrow 15,789,473.68$

Total interest paid 616,100.02$


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Input Area:

Line of credit 70,000,000$Interest rate per quarter 2.300%Compensating balance 4.00%Bank pays 1.20%

b. Amount borrowed 45,000,000$Months to repay 12Compounding periods/year 4

Output Area:

a. EAR 4.89%

b. Opportunity cost 48,870.93$Interest cost 4,285,032.65$Total interest 4,333,903.59$

EAR 9.63%

c. Interest cost 6,665,606.35$

EAR 9.52%


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Chapter 18Questions 15, 16

Input Area:

Q1 Q2 Q3 Q4

Sales (in millions) 210$ 180$ 245$ 280$

Sales (1st quarter of next year) 240$A/R 68$Collection period 45% of purchases for next Q sales 45%Suppliers paid 36% of sales for expenses 25%Interest and dividends 12$Outlay in second Q 80$Beginning cash balance 64$Minimum balance (in millions) 30$Borrowing rate 3%Invested securities 2%Beginning short-term borrowing -$

Output Area:

45-day collection period means sales collectiond = 1/2 current sales + 1/2 old sales

36-day payables period means payables = 3/5 current orders + 2/5 old orders

Q1: Cash flow 40.50$Q2: Cash flow (40.55)$Q3: Cash flow 19.55$Q4: Cash flow 65.30$

Beginning receivables 68.00$ 105.00$ 90.00$ 122.50$Sales 210.00 180.00 245.00 280.00Collection of accounts 173.00 195.00 212.50 262.50Ending receivables 105.00$ 90.00$ 122.50$ 140.00$

Payment of accounts 86.40$ 98.55$ 119.70$ 115.20$Wages, taxes, and other expenses 52.50 45.00 61.25 70.00Capital expenditures 80.00Interest & dividends 12.00 12.00 12.00 12.00Total cash disbursements 150.90$ 235.55$ 192.95$ 197.20$

Total cash collections 173.00$ 195.00$ 212.50$ 262.50$Total cash disbursements 150.90 235.55 192.95 197.20Net cash inflow 22.10$ (40.55)$ 19.55$ 65.30$

Q1 Q2 Q3 Q4

Beginning cash balance 64.00$ 86.10$ 45.55$ 65.10$Net cash inflow 22.10 (40.55) 19.55 65.30

Ending cash balance 86.10$ 45.55$ 65.10$ 130.40$Minimum cash balance (30.00) (30.00) (30.00) (30.00)Cumulative surplus (deficit) 56.10$ 15.55$ 35.10$ 100.40$

Target cash balance 30.00$ 30.00$ 30.00$ 30.00$Net cash inflow 22.10 (40.55) 19.55 65.30New short-term investments (22.78) - (19.90) (65.70)Income on short-term investments 0.68 1.14 0.35 0.40Short-term investments sold - 39.41 - -New short-term borrowing - - - -Interest on short-term borrowing - - - -Short-term borrowing repaid - - - -Ending cash balance 30.00$ 30.00$ 30.00$ 30.00$

Cash Balance

Short-term Financial Plan


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Minimum cash balance (30.00) (30.00) (30.00) (30.00)Cumulative surplus (deficit) -$ -$ -$ -$

Beginning short-term investments 34.00$ 56.78$ -$ 17.37$Ending short-term investments 56.78$ 17.37$ 19.90$ 83.46$Beginning short-term debt -$ -$ -$ -$Ending short-term debt -$ -$ -$ -$

Q1: excess funds at start of quarter of $34.00 earns $0.68 in income.Q2: excess funds at start of quarter of $56.78 earns $1.14 in income.Q3: excess funds at start of quarter of $17.37 earns $0.35 in income.Q4: excess funds at start of quarter of $19.90 earns $0.40 in income.

Net cash costQ1 0.68$Q2 1.14$Q3 0.35$Q4 0.40$Cash generated by short-term financing 2.56$


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Input Area:

Line of credit 400,000,000$% for borrowing 1.90%Compensating balance 4%Commitment fee 0.140%Compounding periods/year 4

b. Used credit 130,000,000$

Output Area:

a. For every dollar borrowed, you pay

$0.019 in interestinterest and get to use $0.960EAR 8.145%

b. Interest paid 10,165,163.62$Amount received 124,240,000.00$

EAR 8.182%


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Input Area:

Interest rate 10%Line of credit 25,000,000$Compensating balance 5%

Output Area:

Interest payment 2,500,000$

Compensating balance 1,250,000$Usable funds 21,250,000$

EAR 11.76%

fcf 9th edition chapter 18

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