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ACC - The Robinson Company

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Question;The Robinson Company has the following current assets andcurrent liabilities for these two years:2010 2011Cash and marketable securities $ 50,000 $ 50,000Accounts receivable 300,000 350,000Inventories 350,000 500,000Total current assets $700,000 $900,000Accounts payable $200,000 $250,000Bank loan 0 150,000Accruals 150,000 200,000Total current liabilities $350,000 $600,000If sales in 2010 were $1.2 million, sales in 2011 were $1.3 million,and cost of goods sold was 70 percent of sales, how long were Robinson?soperating cycles and cash conversion cycles in each of these years?What caused them to change during this time?3. The Robinson Company from Problem 2 had net sales of$1,200,000 in 2010 and $1,300,000 in 2011.a. Determine the receivables turnover in each year.b. Calculate the average collection period for each year.c. Based on the receivables turnover for 2010, estimate theinvestment in receivables if net sales were $1,300,000 in 2011.d. How much of a change in the 2011 receivables occurred?4. Suppose the Robinson Company had a cost of goods sold of$1,000,000 in 2010 and $1,200,000 in 2011.a. Calculate the inventory turnover for each year. Comment onyour findings.b. What would have been the amount of inventories in 2011 ifthe 2010 turnover ratio had been maintained?5. Given Robinson?s 2010 and 2011 financial information presentedin problems 2 and 4,a. Compute its operating and cash conversion cycle in each year.b. What was Robinson?s net investment in working capital eachyear?6. Robinson expects its 2012 sales and cost of goods sold to grow by5 percent over their 2011 levels.a. What will be the affect on its levels of receivables, inventories,and payments if the components of its cash conversioncycle remain at their 2011 levels? What will be its net investmentin working capital?b. What will be the impact on its net investment in workingcapital in 2012 if Robinson is able to reduce its collectionperiod by five days, its inventory period by six days, andincrease its payment period by two days?7. Robinson expects its 2012 sales and cost of goods sold to grow by20 percent over their 2011 levels.a. What will be the affect on its levels of receivables, inventories,and payments if the components of its cash conversioncycle remain at their 2011 levels? What will be its net investmentin working capital?b. What will be the impact on its net investment in workingcapital in 2012 if Robinson is able to reduce its inventoryperiod by ten days?16. Beckheart is seeking financing for its inventory. Safe-proofWarehouses offers space in their facility for Beckheart?s inventory.They offer loans with a 15 percent APR equal to 60 percent of theinventory. Monthly fees for the usage of the warehouse are $500 plus0.5 percent of the inventory?s value. If Beckheart has saleableinventory of $2 million,a. how much money can the firm borrow?b. what is the interest cost of the loan in dollars over a year?c. what is the total amount of fees to be paid in a year?d. what is the effective annual rate of using Safe-proof to financeBeckheart?s inventory?

 

Paper#39311 | Written in 18-Jul-2015

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