FIN3702 Assignment 1
(ANSWERS) Semester 2 2023 -
DISTINCTION
GUARANTEED good grades.
for more assistance whatsapp +254740539068
The purpose of managing current assets and current liabilities is to …
a. achieve as low a level of current assets as possible.
b. a chieve as low a level of current liabilities as possible.
C. achieve as high a level of current liabilities as possible.
d. balance between profitability and risk to achieve fi rm value.
The purpose of managing current assets and current liabilities is to achieve a balance
between profitability and risk to achieve firm value. This means that the goal is not to have
the lowest level of current assets or the lowest level of current liabilities, but rather to
optimize the levels of both to maximize profitability while minimizing risk.
The cash flows from operating activities section in the statement of cash flows considers
…
1. dividends paid.
2. interest expenses.
3. share repurchases.
4. cost of raw materials.
The cash flows from operating activities section in the statement of cash flows considers
dividends paid, interest expenses, and the cost of raw materials. However, share
repurchases are not included in this section.
, QUIZ
The purpose of managing current assets and current liabilities is to …
a. achieve as low a level of current assets as possible.
b. a chieve as low a level of current liabilities as possible.
C. achieve as high a level of current liabilities as possible.
d. balance between profitability and risk to achieve fi rm value.
The purpose of managing current assets and current liabilities is to achieve a balance
between profitability and risk to achieve firm value. This means that the goal is not to have
the lowest level of current assets or the lowest level of current liabilities, but rather to
optimize the levels of both to maximize profitability while minimizing risk.
The cash flows from operating activities section in the statement of cash flows considers
…
1. dividends paid.
2. interest expenses.
3. share repurchases.
4. cost of raw materials.
The cash flows from operating activities section in the statement of cash flows considers
dividends paid, interest expenses, and the cost of raw materials. However, share
repurchases are not included in this section.
A firm has a cash conversion cycle of 70 days. Annual outlays are R17.5 million and the cost of
negotiated financing is 9.66%. If the firm reduces its average age of inventory by 12 days, the
annual saving will approximately be … (assume 365 days per year).
1. R40 000.
2. R55 578.
3. R81 918
4. R104 000
To calculate the annual saving when reducing the average age of inventory by 12 days, we
need to calculate the reduction in the cash conversion cycle. The cash conversion cycle is
the average number of days it takes for a firm to convert its inventory into cash. In this
case, the cash conversion cycle is reduced by 12 days. .
To calculate the annual saving, we can use the formula:
Annual Saving = (Reduction in Cash Conversion Cycle / 365) * Annual Outlays * Cost of
Negotiated Financing
Plugging in the values:
Annual Saving = () * R17.5 million * 9.66%
The annual saving will be approximately R55,578.
All of the following are outfl ows of cash EXCEPT…
1. an increase in inventory.
2. a decrease in notes payable.
3. a decrease in accounts receivable.
4. an increase in accounts receivable.
(ANSWERS) Semester 2 2023 -
DISTINCTION
GUARANTEED good grades.
for more assistance whatsapp +254740539068
The purpose of managing current assets and current liabilities is to …
a. achieve as low a level of current assets as possible.
b. a chieve as low a level of current liabilities as possible.
C. achieve as high a level of current liabilities as possible.
d. balance between profitability and risk to achieve fi rm value.
The purpose of managing current assets and current liabilities is to achieve a balance
between profitability and risk to achieve firm value. This means that the goal is not to have
the lowest level of current assets or the lowest level of current liabilities, but rather to
optimize the levels of both to maximize profitability while minimizing risk.
The cash flows from operating activities section in the statement of cash flows considers
…
1. dividends paid.
2. interest expenses.
3. share repurchases.
4. cost of raw materials.
The cash flows from operating activities section in the statement of cash flows considers
dividends paid, interest expenses, and the cost of raw materials. However, share
repurchases are not included in this section.
, QUIZ
The purpose of managing current assets and current liabilities is to …
a. achieve as low a level of current assets as possible.
b. a chieve as low a level of current liabilities as possible.
C. achieve as high a level of current liabilities as possible.
d. balance between profitability and risk to achieve fi rm value.
The purpose of managing current assets and current liabilities is to achieve a balance
between profitability and risk to achieve firm value. This means that the goal is not to have
the lowest level of current assets or the lowest level of current liabilities, but rather to
optimize the levels of both to maximize profitability while minimizing risk.
The cash flows from operating activities section in the statement of cash flows considers
…
1. dividends paid.
2. interest expenses.
3. share repurchases.
4. cost of raw materials.
The cash flows from operating activities section in the statement of cash flows considers
dividends paid, interest expenses, and the cost of raw materials. However, share
repurchases are not included in this section.
A firm has a cash conversion cycle of 70 days. Annual outlays are R17.5 million and the cost of
negotiated financing is 9.66%. If the firm reduces its average age of inventory by 12 days, the
annual saving will approximately be … (assume 365 days per year).
1. R40 000.
2. R55 578.
3. R81 918
4. R104 000
To calculate the annual saving when reducing the average age of inventory by 12 days, we
need to calculate the reduction in the cash conversion cycle. The cash conversion cycle is
the average number of days it takes for a firm to convert its inventory into cash. In this
case, the cash conversion cycle is reduced by 12 days. .
To calculate the annual saving, we can use the formula:
Annual Saving = (Reduction in Cash Conversion Cycle / 365) * Annual Outlays * Cost of
Negotiated Financing
Plugging in the values:
Annual Saving = () * R17.5 million * 9.66%
The annual saving will be approximately R55,578.
All of the following are outfl ows of cash EXCEPT…
1. an increase in inventory.
2. a decrease in notes payable.
3. a decrease in accounts receivable.
4. an increase in accounts receivable.
