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Corporate Finance

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Book used - Corporate Finance, 8th edition by Ross, Westerfield, Jaffe.
Problems: Chapter 26, #5 and #8 and Chapter 28, #4

All calculations must be shown. For problems that have an Excel template, be sure to download the template from the publisher's web site, and save as an Excel file.

Chapter 26: Problems 5 and 8 (both chapter 26 problems have a template)

Chapter 28: Problem 4 (template is available)

Calculating Cash Collections; the Litzenberger Company has projected the following quartely sales amounts for the coming year

sales: Q1 -$800, Q2 - $760, Q3 -$940, Q4 -$870

a. Accounts receivable at the beginning of the year are $300. Litzenberger has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following:
Q1 Q2 Q3 Q4

Beginning receivables
Cash Collections
Ending receivables

b. Rework (a) assuming a collection period of 60days
c. Rework (a) assuming a collection period of 30 days

Calculating payments - The Thakor Corporation's purchases from suppliers in a quarter are equal to 75 percent of the next quarter's forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 20 percent of sales, and interest and dividends are $60 per quarter. No capital expenditures are planned.

Here are the projected quartely sales:

Q1 Q2 Q3 Q4
sales $750 $920 $890 $790

Sales for the first quarter of the following year are projected at $970. Calculate the company's cash outlay by completing the following:

Q1 Q2 Q3 Q4
Payment of accounts
Wages, Taxes, other expenses
Long-term financing expenses
(interest and dividends)

Problems: Chapter 28, question #4
Size of Accounts Receivable - Vitale, Baby!, Inc., has weekly credit sales of $18,000, and the average collection period is 29 days. The cost of production is 80 percent of the selling price. What is Vitale's average accounts receivable figure?

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Solution Summary

The solution explains various finance questions relating to cash collections, cash payments and average accounts receivable

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After reviewing the McBride Financial Services scenario, you will identify several issues that directly connect to the concepts in the mind maps for Weeks 1 through 3. In addition to reading the assigned text materials to develop knowledge about the concepts, a thorough master's-level education requires the development of effective research skills. In this assignment, you will work collaboratively to create a rich source from which you will individually develop alternative solutions for McBride Financial Services.
Step 1
Individually, identify and research two companies that have faced specific issues related to those you identified in the scenario and connected with the course concepts. For each company selected, discuss the following in a 350-word synopsis: (A) issue identified in the scenario that is also facing the company, (B) how the company responded to the issue, and (C) outcomes of the company's response to the issue. Thus, each team member should have two 350-word synopses, one for each company, which provides the information identified. To avoid duplication of efforts, each team member should identify, to the team, the companies he or she will be researching before doing this part of the assignment.
Step 2
As a team, based upon the information gathered from the individual work done in Step 1, prepare a 1,050-word to 1,400-word analysis that synthesizes the key findings. As a team, using the companies researched: (A) identify the key course concepts and (B) compare and contrast the practices of each company related to those concepts. Appropriately cite all references used.
Step 3
The team will submit a final composition which consists of a title page, the team's overall analysis, the individual company synopses (with the preparer of each synopsis identified), and an appropriate reference page. As a guideline, a team of five will submit roughly 13-14 pages of material as well as a title page and reference page.

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