Finaance Sollution

1. a. The simulation indicates that 584 is the optimum stocking quantity. Daily profit at this stocking quantity is $331.4346.

13. Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. Eddy Auto Supplies Balance Sheet December 31, 2014 Cash $84,000 Accounts payable $110,000 Accounts receivable $80,000 Salaries and wages payable $20,000 Inventory $140,000 Mortgage payable $180,000 Prepaid insurance $60,000 Total liabilities $310,000 Stock investments $170,000 Land $190,000 Buildings $226,000 Common stock $240,000 Less: Accumulated Retained earnings $500,000 depreciation ($40,000) $186,000 Total

Operating cash flow was not enough to cover capital investments (this firm does not to appear to pay dividends as it does not show in the prior 3 years). The firm is financing it operations from the issuance of common stock. $23,082 was raised during the period, which is covering its investments in capital expenditures.

The Castillo Products Company was started in 2008. The company manufactures components for personal digital assistant (PDA) products and for other handheld electronic products. A difficult operating year, 2009, was followed by a profitable 2010. The founders (Cindy and Rob Castillo) are interested in estimating their cost of financial capital because they are expecting to secure additional external financing to support planned growth.

= 5.0% + 8.4% = 13.4%. DCF (Direct Cash Flow) = 13.6 DC+ RP = 12.3

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

Break-even Dollar Volume = Total Fixed Costs / Contribution Margin = $525,000 / 0.7111 = $738,282.40

Webmasters.com has developed a powerful new server that would be used for corporations’ Internet activities. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 10% of the year's projected sales; for example, NWC0 = 10%(Sales1). The servers would sell for $24,000 per unit, and Webmasters believes that variable costs would amount to $17,500 per unit. After Year 1, the sales price and variable costs will increase at the inflation rate of 3%. The company’s

Operating capital in the total amount of $40,000 which includes cash reserves of $27,000 and inventory for the first two months of operation.

Moving onto the balance sheet, it is safe to assume that the cash position in the firm will increase the rate of the sales growth going forward. In actuality, cash has historically increased faster than the growth of revenue with 2004 being an exception. To calculate the assumption for accounts receivable, inventory, and accounts payable, we averaged the four years worth of data

d) If Tyler is estimating a gross profit margin, or contribution margin, of 40 percent, how much of the receivables balance must actually

Working Capital is defined as “a measure of both a company 's efficiency and its short-term financial health. (Investopedia, 2016.)” Having an efficient working capital can make or break a business’s success. To expand on our experience with working capital, we ran the Harvard Business Publication Working Capital Simulation. In our simulation, we are co-owners of Sunflower Nutraceuticals (SNC), “an internet-based, direct-to-consumer distributor and retailer of dietary supplements, including vitamins, minerals, and herbs for women (Harvard Business Publication, 2014.)”, looking to create more working capital for the company so Sunflower Nutraceuticals can expand. We were told that SNC is breaking even with a flat annual sales growth on total revenues of $10 million. The company has struggled to finance the payroll, and more than once overdrawn on the line of credit in the past. SNC keeps the minimum amount of cash on hand ($300,000) to meet its operational needs. A national bank, Miami Dade Merchant 's Bank (MDM), has issued a line of credit with restrictive covenants; credit limit of $3,200,000, and rate of 8%. We were also provided with a forecast of the global nutraceuticals market. In 2010 the market worth was approximately $128.6 billion and forecasted to grow at a compound annual growth rate of 4.9% and reach $180.1 billion by 2017 (Harvard Business Publication, 2014.). After being given all of this information, it was up to us to make

Problem #2.” (To make your life easier, optimal stocking quantity, Q, is computed by the

a. Assuming the most current operational cost levels, what sales must it generate to recoup the above investment?

CASH CONVERSION CYCLE = (DAYS INVENTORY OUTSTANDING) + (DAYS SALES OUTSTANDING) - (DAYS PAYABLE OUTSTANDING)