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    Exercises 1.2.

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    Rita Moreno
    This document provides information to reconstruct a balance sheet, assess working capital requirements for different industries, and analyze financing strategies and the effect of managing the operating cycle for three firms (Firm A, B, C). It includes accounting data on working capital requirement, collection period, and inventory turnover for three example firms to determine which is a retail store, beverages store, or cruise company. It also provides managerial balance sheet data across three years to analyze changes in the financing policy and how managing the operating cycle differently could affect the financing strategy.

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    Exercises 1.2.

    Uploaded by

    Rita Moreno
    19 views2 pages
    This document provides information to reconstruct a balance sheet, assess working capital requirements for different industries, and analyze financing strategies and the effect of managing the operating cycle for three firms (Firm A, B, C). It includes accounting data on working capital requirement, collection period, and inventory turnover for three example firms to determine which is a retail store, beverages store, or cruise company. It also provides managerial balance sheet data across three years to analyze changes in the financing policy and how managing the operating cycle differently could affect the financing strategy.

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    exercicio oganização industrial

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    This document provides information to reconstruct a balance sheet, assess working capital requirements for different industries, and analyze financing strategies and the effect of managing the operating cycle for three firms (Firm A, B, C). It includes accounting data on working capital requirement, collection period, and inventory turnover for three example firms to determine which is a retail store, beverages store, or cruise company. It also provides managerial balance sheet data across three years to analyze changes in the financing policy and how managing the operating cycle differently could affect the financing strategy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    19 views2 pages

    Exercises 1.2.

    Uploaded by

    Rita Moreno
    This document provides information to reconstruct a balance sheet, assess working capital requirements for different industries, and analyze financing strategies and the effect of managing the operating cycle for three firms (Firm A, B, C). It includes accounting data on working capital requirement, collection period, and inventory turnover for three example firms to determine which is a retail store, beverages store, or cruise company. It also provides managerial balance sheet data across three years to analyze changes in the financing policy and how managing the operating cycle differently could affect the financing strategy.

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    © All Rights Reserved
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    Gestão Financeira – MGEI – 2019/2020

    Part I - 2. Assessing operational efficiency and liquidity

    8. Reconstructing a balance sheet

    Use the following information to complete the balance sheet below.

    a) Collection period: 40 days


    b) Inventory turnover: 6 times sales
    c) Working capital requirement/sales: 20%
    d) Liabilities/total assets: 60%
    e) Cash in days of sales: 20 days
    f) Short-term debt: 10% of total financial debt

    Assume a 360-day year.

    Assets Liabilities
    Cash 400,000 Short-term debt
    Accounts receivable Accounts payable
    Inventory
    Total current Total current liabilities

    Net fixed assets Long-term debt


    Owners’ equity
    Total assets 5,000,000 Total liabilities and owners’

    9. Industry effect on working capital requirement

    Consider the following accounting data of these three firms:

    Firm 1 Firm 2 Firm 3

    WCR $1,489 ($4,250) $1,207


    WCR/Sales 53.3% –27.6% 0.3%
    Collection period 61.5 days 17.3 days 5.3 days
    Inventory turnover 1.9 39.4 10.7

    Which firm is: a retail store, a beverages store and a cruise company? Explain why.
    10. Financing strategies
    Firm A Firm B Firm C
    Invested capital
    Cash $0 $10 $ 0
    Working capital requirement 25 15 25
    Net fixed assets 50 50 50
    Total invested capital $75 $75 $75

    Capital employed
    Short-term debt $0 $0 $10
    Long-term financing 75 75 65
    Total capital employed $75 $75 $75

    a) Complete. Firm A Firm B Firm C

    Net long-term financing

    Net short-term financing

    b) Which of the following companies has a matching, a conservative and an aggressive


    financing strategy?

    11. The financial effect of the management of the operating cycle


    Managerial balance sheets Year-end Year-end Year-end
    1 2 3

    Cash $ 600 $ 350 $ 300


    Working capital 3,930 4,440 6,100
    Net fixed assets 1,200 1,300 1,450
    Total invested capital $5,730 $6,090 $7,850

    Capital employed
    Short-term debt $ 300 $ 500 $1,900
    Long-term financing 5,430 5,590 5,950
    Long-term debt $1,300 $1,200 $1,100
    Owners’ equity 4,130 4,390 4,850
    Total capital employed $5,730 $6,090 $7,850

    a) Comment on the change in financing policy. Has it become more conservative


    or aggressive? What caused this change?

    b) In year 3, firms in the same sector as this one had an average collection period of
    30 days, average payment period of 33 days and inventory turnover of 8 days.
    Suppose this firm had managed its operating cycle like the average firm in the
    sector. What would have been the effect on its financing strategy? Consider the
    following additional data from income statement and balance sheet: sales =
    31.600, COGS = 25.100 and inventory from year 2 = 3200)

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