Chapter 3: Q11DQ (page 219)
If a firm uses a just-in-time inventory system, what effect is that likely to have on the number and location of suppliers?
The just-in-time system requires that there are few suppliers who are closely located.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
What are the 5 Cs of credit that are sometimes used by bankers and others to determine whether a potential loan will be repaid?
Mervyn’s Fine Fashions has an average collection period of 50 days. The accounts receivable balance is $95,000. What is the value of its credit sales?
Neon Light Company of Kansas City ships lamps and lighting appliances throughout the country. Ms. Neon has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by three days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments on her accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Florida.
a. If Neon Light Company has \(2.25 million per day in collections and \)1.05 million per day in disbursements, how many dollars will the cash management system free up?
b. If Neon Light Company can earn 6 percent per annum on freed-up funds, how much will the income be?
c. If the total cost of the new system is $400,000, should it be implemented?
In Problem 18, what long-term interest rate would represent a break-even point between using short-term financing as described in part a and long-term financing? (Hint: Divide the interest payments in 18a by the amount of total funds provided for the six months and multiply by 12.)
What are the advantages of commercial paper in comparison with bank borrowing at the prime rate? What is a disadvantage?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
