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The cash cycle can exceed the operating cycle if the payables period is
equal to zero.
Offering early payment discounts to customers will tend to increase the
cash cycle.
Precise Machinery is analyzing a proposed project. The company
expects to sell 2100 units giv e or take 5 percent. The expected variable
cost per unit is $260 and the expected fixed costs are $589,000. Cost
estimates are considered accurate within a plus or minus 4 percent range.
The depreciation expense is $129,000. The sales price is estimated at
$750 per unit, give or take 2 percent. The tax rate is 35 percent. The
company is conducting a sensitivity analysis on the sales price using a
sales price estimate of $755. What is the operating cash flow based on
this analysis?
$86,675
$354,874
$368,015
$293,089
$337,975
You are doing some comparison shopping. Five stores offer the product
you want at basically the same price but with differing credit terms.
Which one of these terms is best-suited to you if you plan to forgo the
discount?
2/10, net 30
2/5, net 30
2/5, net 20
1/10, net 45
1/5, net 15
The plowback ratio is:
The dollar increase in net income divided by the dollar increase in sales.
Equal to net income divided by the change in total equity.
Equal to one minus the retention ratio.
The change in retained earnings divided by the dividends paid.
The percentage of net income available to the firm to fund future growth.