CHAPTER 16 WORKING CAPITAL POLICY AND SHORT-TERM FINANCING ANSWERS TO QUESTIONS: 1. The need for working capital arises because the normal operating cycle of the firm requires that expenditures for raw materials, labor, etc. be made prior to receipt of the funds from the sale of the output. Funds must be invested during the operating cycle in the various short-term assets that make up working capital--namely, cash, inventories, and accounts receivable. 2. The operating
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2|Page RATIO 1. Short-term liquidity ANALYSIS Both of the current ratio and the acid-test ratio are more favorable for KO (1.13 and 0.65) than CCE (0.89 and 0.53). Clearly, the gap between two firms is reduced when it comes to the acid-test ratio. The account receivable turnover for KO is also better than that of CCE. However, the difference is just marginal. The significant mark is the inventory turnover rate. CCE can turn over the inventory much faster than KO. It can be understandable that
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Below is a free essay on "Dell's Working Capital" from Anti Essays, your source for free research papers, essays, and term paper examples. Group Case: Dell's Working Capital Fundamentals of Managerial Finance 1) How was Dell's working capital policy a competitive advantage? Dell Computer Corporation in the mid-90s was using a just in time order fulfillment system and accurate forecasting to reduce its inventories to the lowest possible levels in the highly competitive PC market where profit
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transactions in a manner useful to the users. This function involves the preparation of financial statements such as income statement, balance sheet, statement of changes in financial position and cash flow statement 6. Analyzing: It deals with the establishment of relationship between the various items or group of items taken from income statement or balance sheet or both. Its purpose is to identify the financial strengths and weakness of the enterprise. The above six present day scenario are
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2013 Project on “Working Capital” Sumit Singh Registration No:-016-1121-0250-10 Roll No: - 301-0063 B-com (Honours), 3rd year Syma Prasad College 1 [Type the author name] 1/1/2013 DECLARATION I am Sumit Singh Student of SYMA PRASAD COLLEGE Of B-com( Honours) 3rd Year hereby declare that the project report entitled Working Capital the outcome of my own work and the same has not been submitted to any University / Institute for the award of any degree. Sumit Singh Registration No:-016-1121-0250-10
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Chapter 8 Discussion Question #3, #5, and #11 3. The purchase method is used when one entity acquires another, whereas the pooling method accounts for the uniting of the ownership interests of two (or more) entities. The pooling-of-interest method provides distinct advantages to many firms entering into a business combination. The assets and liabilities of both parties are combined at book value and revenues and expenses are combined retroactively. With the purchase method
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4/24/2012 BUS 100 Jay Hosey What Are Financial Statements? Business owners use three basic financial statements to track the financial health of there businesses. These statements are the income statement, the cash flow statement, and the balance sheet. Business owners generally create these statements monthly using their financial records. The Income Statement An income statement is a financial statement used to show whether a business is generating a profit or experiencing a loss. This
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purpose of this project is to provide an understanding on the process of impairment of assets and determining how it affects the financial statement and its users. B. The main purpose of standard IAS 36 is to ensure that the assets reported of Balance Sheet are recorded at no more than its recoverable amount. An asset or cash-generating unit will be considered impaired if the carrying amount is greater than the value of the sale of the asset or amount that could be recovered through use of the
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Interest 573,200 Taxable Income 3,710,060 Taxes (40%) 1,484,024 Net Income $2,226,036 Dividends ($2,226,036*0.30) $667,811 Add to Retained Earnings $1,558,225 Pro forma Balance Sheet Assets Liabilities and Stockholder’s Equity Current Assets Current Liabilities Cash ($396,900*1.12) $444,528 Accounts Payable ($844,550*1.12) $945,896 Accounts Receivable ($637,560*1.12) 714,067 Notes
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Liabilities - Effects Of Capital Vs. Operating Leases Capital Leases - Effects On: • Balance sheet - At the inception of a capital lease, the company leasing the equipment will record the equipment as an asset, and the company will also recognize a liability on the balance sheet, by an amount equal to the present value of the minimum lease payments. The discount rate used will be the lower of the following two rates: The lessor's (the rental company's) implied rate The lessee incremental
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