FINC Finc400 Principles of Financial Management Questions and Answers Week 1.pdf

2023




FINC Finc400 Principles of
Financial Management
Questions and Answers
Week 1




JK





,1.



A firm has sales of $3.1 million, and 10 percent of the sales are for cash. The
year-end accounts receivable balance is $170,000.

What is the average collection period? (Use a 360-day year. Do not
round intermediate calculations. Round your final answer to
2 decimal places.)

Explanation
Average daily credit sales = Credit sales / Number of days in year
= [$3,100,000 × (1 – 0.10)] / 360
= $7,750.00


Average collection period = Accounts receivable / Average daily credit sales
= $170,000 / $7,750.00
= 21.94 days

, 2.



Dodge Ball Bearings had sales of 11,000 units at $80 per unit last year. The
marketing manager projects a 25 percent increase in unit volume sales this
year with a 15 percent price decrease (due to a price reduction by a
competitor). Returned merchandise will represent 4 percent of total sales.

What is your net dollar sales projection for this year?

Explanation
Dodge Ball Bearings
Projected sales $935,000
Returns 37,400

Net sales $897,600




Projected sales = (11,000 × 1.25) × [$80 × (1 − 0.15)] = $935,000
Returns = 0.04 × $935,000 = $37,400