FIN 4200- COGS are 80% of Sales.
COGS are 80% of Sales. You collect 80% of sales in the month of sale and the remaining 20% in the month following the sale. You purchase 60% of your COGS in the month of sale and 40% in the month prior to the sale. You pay for 70% of purchases in the month that it is purchased and the remaining 30% in the month after it is purchased.12. How much was Cash Used in February? a.4260 b. 4720 c. 5440 d. 6200 13. How much was Purchases in March? a.2360 b. 2920 c. 3560 d. 4320 14. What is the Accounts Receivable balance in January? a.4200 b. 4800 c. 5400 d. 580015. What is the Effective cost of trade credit if the terms are 1/15, net 40 assuming that you forego the discount and pay on the 40th day? a.13.4% B. 15.8% c. 18.6% d. 21.7%16. Suppose a firm starts using accelerated depreciation instead of straight-line depreciation (so their depreciation expense is higher). What effect would this have on their financial statements?a. The firm’s tax payments would increase.b. The firm’s net cash flow would increase.c. The firm’s Additional Financing Needed would increase.d. The firm’s net income would increase.17. Other things held constant, which of the following would lead to a shorter cash conversion cycle?a. Cash is used to buy marketable securities.b. A company pays their accounts payable earlier in order to take advantage of discounts.c. A company offers discounts to their customers and therefore gets paid earlier.d. Long-term bonds are retired from the proceeds of a preferred stock issue.18. Which of the following is NOT true regarding a revolving credit agreement? a. the interest rate is usually a fixed rate b. the borrower must pay a commitment fee on any unborrowed funds c. the bank is legally committed to lend the funds d. None of the above (All of the above are true)
