Question 1: You purchase 1,000 USD of bonds in Japan which pay a 6% coupon every year.

If
the bond’s maturity is 4 years and the YTM is 5.5%. What is the value of the bond?
Answer:
The value of the bond is:
1 − (1 + 𝑌𝑇𝑀)−𝑡 𝐹𝑎𝑐𝑒 𝑉𝑎𝑙𝑢𝑒
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑏𝑜𝑛𝑑 = 𝐶𝑜𝑢𝑝𝑜𝑛 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 × +
𝑌𝑇𝑀 (1 + 𝑌𝑇𝑀)𝑡
Coupon payment = Face value*Coupon rate = 1000*6% = 60 USD
Time to maturity = 4 years
1 − (1 + 5.5%)−4 1000
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑏𝑜𝑛𝑑 = 60 × + = 1017.52 𝑈𝑆𝐷
5.5% (1 + 5.5%)4

Question 2: Most of Dynamic’s cash flow inflow comes from the sale of mattresses. We therefore
start with a sales forecast by quarter for 2015:
First Second Third Fourth
Quarter Quarter Quarter Quarter
Receivables at start of
period ($ millions) 150
Sales ($ millions) 560 502 742 836
We assume that sales in the last quarter of the previous year were $ 240 million.
Cash at start of period 25
Sales become accounts receivable before they become cash. Cash flow comes from collections on
account receivable. Suppose that 65% of sales are cashed in in the immediate quarter and 35% are
cashed in the following quarter.

Uses of cash:
Uses of cash
Payments on account payable 250 250 267 261
Increase in inventory 150 150 170 180
Labor and Other expenses 136 136 136 136
Capital expenditures 70 10 8 14.5
Taxes, interest and dividends 46 46 46 46
Total uses 652 592 627 637.5
a. Calculate receivables at the end of period in 2015.
b. Construct table showing Dynamic’s cumulative financing requirement in 2015. We assume that
Dynamic’s minimum operating cash balance is $28 million.
Answer:
 First Second Third Fourth
Quarter Quarter quarter Quarter
Account receivable (beginning balance) 150 262 241.7 325.7
Sales 560 502 742 836
Collections
560*65% = 502*65% =
Sales at the current period 482.3 543.4
364 326.3
240*35% = 560*35% =
Sales in the last period 175.7 259.7
84 196
364 + 84 = 326.3 + 196
Total collections 658 803.1
448 = 522.3
502 +262 –
560 + 150 –
Account receivable (ending balance) 522.3 = 325.7 358.6
448 = 262
241.7

First Second Third Fourth

quarter quarter quarter quarter
1. Total sources of cash 448 522.3 658 803.1
2. Uses of cash 652 592 627 637.5
448 - 652 = 522.3 – 592
3. Sources minus uses 31 165.6
-204 = -69.7

Cash (beginning balance) 25 -179 -248.7 -217.7

Change in cash balance -204 -69.7 31 165.6
(-179)+(-
25 + (-204)
Cash (ending balance) 69.7) = - -217.7 -52.1
= -179
248.7
Minimum operating balance 28 28 28 28
179 + 28 = 248.7 + 28 =
Cumulative capital required 245.7 80.1
207 276.7

Question 3: The default rate of Demurrage Associates' new customers has been running at 10%.
The average sale for each new customer amounts to $800, generating a profit of $100 and a 40%
chance of a repeat order next year. The default rate on repeat orders is only 2%. If the interest rate
is 9%, what is the expected profit from each new customer?
Answer:
Expected profit for the first order:
𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)1𝑠𝑡 = 𝑝 × 𝑃𝑉(𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝐶𝑜𝑠𝑡) − (1 − 𝑝) × 𝑃𝑉(𝐶𝑜𝑠𝑡)
Where p is the probability of payoff from customer and here p = 100% - 10% = 90%
𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)1𝑠𝑡 = 90% × 100 − (1 − 90%) × (800 − 100) = 20
Expected profit for the Repeat order:
𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)𝑟𝑒𝑝𝑒𝑎𝑡 = 𝑝 × 𝑃𝑉(𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝐶𝑜𝑠𝑡) − (1 − 𝑝) × 𝑃𝑉(𝐶𝑜𝑠𝑡)

Where p is the probability of payoff from customer and here p = 100% - 2% = 98%
 𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)𝑟𝑒𝑝𝑒𝑎𝑡 = 98% × 100 − (1 − 98%) × (800 − 100) = 84

Expected profit for each new customer:

𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)𝑟𝑒𝑝𝑒𝑎𝑡
𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)𝑛𝑒𝑤 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟 = 𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)1𝑠𝑡 + 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑜𝑓 𝑟𝑒𝑝𝑒𝑎𝑡 𝑜𝑟𝑑𝑒𝑟 × ( )
(1 + 𝑟)1
84
𝐸(𝑃𝑟𝑜𝑓𝑖𝑡)𝑛𝑒𝑤 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟 = 20 + 40% × ( ) = 50.83
(1 + 9%)1

Question 04:
• Project 01: A production line costs $1,200,000. Ben – CEO of ABC Corporation considers
that it will produce an inflow after operating costs of $251,000 a year for 8 years. If the
opportunity cost of capital is 14%, what is the net present value of this production line?
• Project 02: A project requires an initial investment of $21,600 and will produce cash
inflows of $4,900, $14,200, and $8,700 over the next three years, respectively. What is the
project's NPV at a required return of 14 percent?
Answer:
The Net Present Value of the Project is:
𝐶𝐹1 𝐶𝐹2 𝐶𝐹𝑛
𝑁𝑃𝑉 = −𝐼 + + + ⋯ +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟)𝑛
+ Project 01: because this is an equal cash flows so we have:
1 − (1 + 𝑟)−𝑡 1 − (1 + 14%)−8
𝑁𝑃𝑉 = −𝐼 + 𝐶𝐹 × = −1,200,000 + 251,000 ×
𝑟 14%
= −35,645.16
+ Project 02:
4,900 14,200 8,700
𝑁𝑃𝑉 = −21,600 + 1
+ 2
+ = −$503.06
(1 + 14%) (1 + 14%) (1 + 14%)3

Question 05:
1. AIA Corporation has just now paid a dividend of $2.83 per share and the dividends are
expected to grow at a constant rate of 4% forever. If the current price of the stock is $20
per share, calculate the expected return or the cost of equity capital for the firm.
2. The required rate of return is 13 percent. AIG Corp. has just paid a dividend of $3.12 and
is expected to grow at a constant rate of 5 percent. What is the current price of the stock?
3. If the discount rate is 10%, Stock B is expected to pay a dividend of $5 next year.
Thereafter, dividend growth is expected to be 9% a year for five years (i.e., until year 6)
and zero thereafter.
Answer:
1. We have the following formula:
𝐷1 𝐷0 (1 + 𝑔)
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 (𝑎𝑡 𝑡𝑖𝑚𝑒 𝑇0 ) = =
𝑟−𝑔 𝑟−𝑔
2.83(1 + 4%)
20 = → 𝑟 = 18.72%
𝑟 − 4%
2. We have the following formula:
𝐷1 3.12(1 + 5%)
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = = = 40.95
𝑟−𝑔 13% − 5%
3. We have the following formula:
𝐷
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = ~𝐷 𝑖𝑠 𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡 𝑓𝑜𝑟𝑒𝑣𝑒𝑟
𝑟
𝐷1 𝐷2 𝐷𝑛 + 𝑃𝑟𝑖𝑐𝑒 𝑎𝑡 𝑦𝑒𝑎𝑟 𝑛
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = 1
+ 2
+ ⋯+
(1 + 𝑟) (1 + 𝑟) (1 + 𝑟)𝑛
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒
5 5(1 + 9%)1 5(1 + 9%)2 5(1 + 9%)3 5(1 + 9%)4
= + + + +
(1 + 10%)1 (1 + 10%)2 (1 + 10%)3 (1 + 10%)4 (1 + 10%)5
5(1 + 9%)5
5(1 + 9%)5 + 10%
+ = 70.08
(1 + 10%)6
Question 06:
1. XYZ stock you are interested in paid a dividend of $1.5 per share last week. The anticipated
growth rate in dividends and earnings is 8 percent for the next three years before settling
down to a constant 5 percent growth rate. The discount rate is 12 percent. What is the
current value of the stock?
2. ABC corporation is going to pay 5,000VND, 6,000VND, and 8,900VND per share over
the next three years, respectively. After that, the company plans to pay annual dividends of
7,700VND per share indefinitely. If your required return is 10 percent, how much are you
willing to pay for one share today?

Answer:
1. We have the following formula:
𝐷1 𝐷2 𝐷𝑛 + 𝑃𝑟𝑖𝑐𝑒 𝑎𝑡 𝑦𝑒𝑎𝑟 𝑛
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + + ⋯ +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟)𝑛
 𝐷1 𝐷2 𝐷3 + 𝑃𝑟𝑖𝑐𝑒 𝑎𝑡 𝑦𝑒𝑎𝑟 3
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = 1
+ 2
+
(1 + 𝑟) (1 + 𝑟) (1 + 𝑟)3
𝐷0 (1 + 𝑔) 𝐷1 (1 + 𝑔) 𝐷2 (1 + 𝑔) + 𝑃𝑟𝑖𝑐𝑒 𝑎𝑡 𝑦𝑒𝑎𝑟 3
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟)3

3 𝐷4
𝐷0 (1 + 𝑔1 ) 𝐷0 (1 + 𝑔1 )2 𝐷0 (1 + 𝑔1 ) + 𝑟 − 𝑔2
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟)3
𝐷0 (1 + 𝑔1 )3 (1 + 𝑔2 )
𝐷0 (1 + 𝑔1 ) 𝐷0 (1 + 𝑔1 )2 𝐷0 (1 + 𝑔1 )3 + 𝑟 − 𝑔2
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟) 3

1.5(1 + 8%)3 (1 + 5%)

1.5(1 + 8%) 1.5(1 + 8%) 2 1.5(1 + 8%)3 +
12% − 5%
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + +
(1 + 12%)1 (1 + 12%)2 (1 + 12%)3
= 24.36

2. We have the following formula:

𝐷1 𝐷2 𝐷𝑛 + 𝑃𝑟𝑖𝑐𝑒 𝑎𝑡 𝑦𝑒𝑎𝑟 𝑛
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = 1
+ 2
+ ⋯+
(1 + 𝑟) (1 + 𝑟) (1 + 𝑟)𝑛
𝐷1 𝐷2 𝐷3 + 𝑃𝑟𝑖𝑐𝑒 𝑎𝑡 𝑦𝑒𝑎𝑟 3
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟)3
𝐷
𝐷1 𝐷2 𝐷3 + 𝑟4
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + +
(1 + 𝑟)1 (1 + 𝑟)2 (1 + 𝑟)3
7700
5000 6000 8900 + 10%
𝑃𝑉 𝑜𝑓 𝑡ℎ𝑒 𝑠ℎ𝑎𝑟𝑒 = + + = 74,042
(1 + 10%)1 (1 + 10%)2 (1 + 10%)3

Question 07:
Balance Sheet
Assets 2021 2020
Current assets
Cash and marketable securities 661 530
Accounts receivable 166 247
Inventories 8,209 7,611
Other current assets 215 298
Total current assets 9,251 8,686
 Fixed assets
Tangible fixed assets
Property, plant, and equipment 31,477 28,836
Less accumulated depreciation 8,755 7,475
Net tangible fixed assets 22,722 21,361

Long term investments 253 509

Other long-term assets 460 313
Total assets 32,686 30,869

Liabilities and Shareholders' Equity 2021 2020

Current liabilities
Debt due for repayment 1,021 1,104
Accounts payable 4,543 4,137
Other current liabilities 2,458 2,510
Total current liabilities 8,022 7,751

Long term debt 5,039 5,576

Deferred income taxes 660 670
Other long term liabilities 910 774
Total liabilities 14,631 14,771

Common Stock and other paid-in-capital 735 729

Retained earnings and capital surplus 17,320 15,369
Total shareholders' equity 18,055 16,098
Total liabilities and shareholders' equity 32,686 30,869

Income Statement 2021

Net sales 48,230
Cost of goods sold 31,729
Selling, general, and administrative expenses 11,158
Depreciation 1,539
Earning before interest and taxes (EBIT) ?
Interest expense 298
Earning before taxes (EBT) ?
Tax (20%) ?
Net Income ?

Look up the latest financial statement for a company:

a. Fill in the blank (?) of Income statement.
b. Calculate the following financial ratios:
 • Return on asset (ROA), return on equity (ROE)
• Current ratio, quick ratio
• Cash cycle (Average Days in Inventory, Average collection period, Average payment
period)
• The firm is analyzing some operational changes that the accounts receivable period increase
by 12 days; and the inventory period decreases by 5 days. The accounts payable period is
forecasted to decrease by 15 days. If all of these changes are adopted, what will the firm's
new cash conversion cycle be?
Answer:
We have the following:
Income Statement 2021
Net sales 48,230
Cost of goods sold 31,729
Selling, general, and administrative expenses 11,158
Depreciation 1,539
Earning before interest and taxes (EBIT) 3,804
Interest expense 298
Earning before taxes (EBT) 3,506
Tax (20%) 701
Net Income 2,804.8

Financial ratios 2021

ROE = Net Income/Total shareholders' equity 15.53%
ROA = Net Income/Total assets 8.58%
Current Ratio = Total current assets/Total current liabilities 1.15
Quick Ratio = (Total current assets - Inventories)/Total
current liabilities 0.13
Inventory turnover = COGS/Average Inventories 4.01 times
Average Days in Inventory=365/Inventory turnover 90.99 days
Account receivable turnover=Sales/Average Receivable 233.56 times
Average collection period=365/Account receivable turnover 1.56 days
Account payable turnover= COGS/Average Accounts
payables 7.31 times
Average payment period=365/Account payable turnover 49.93 days
Cash cycle= Average Days in Inventory + Average
42.05 days
collection period - Average payment period

Average Days in Inventory decrease 5 days 85.99 days

 Average collection period increase 12 days 13.56 days
Average payment period decrease 15 days 34.93 days
Cash cycle = Average Days in Inventory + Average
64.62 days
collection period - Average payment period

Question 08:
1. Ms. Colonial has just taken out a $150,000 mortgage at an interest rate of 6% per year. If
the mortgage calls for equal monthly payments for twenty years, what is the amount of
each payment? (Assume monthly compounding or discounting.)
2. After retirement, you expect to live for 30 years. You would like to have $25,000 income
each year. How much should you have saved in the retirement to receive this income, if
the interest is 9% per year (assume that the payments start on the day of retirement)?

Answer:
1. We have the following formula:
1 − (1 + 𝑟)−𝑡
𝑃𝑉 = 𝐶𝐹 ×
𝑟
1 − (1 + 6%/12)−12∗20
150,000 = 𝐶𝐹 × → 𝐶𝐹 = 1,074.64
6%/12
2. We have the following formula:
1 − (1 + 𝑟)−𝑡 1 − (1 + 9%)−30
𝑃𝑉 = [𝐶𝐹 × (1
] + 𝑟) = [25,000 × ] (1 + 9%) = 279,957.07
𝑟 9%

Question 09: Terry's Place is currently experiencing a bad debt ratio of 4%. Terry is convinced
that, with looser credit controls, this ratio will increase to 10%; however, she expects sales to
increase by 15% as a result. The cost of goods sold is 80% of the selling price. Per $100 of current
sales, what is Terry's expected profit under the proposed credit standards?
Answer:
Expected Sales next year = 100*(1+15%) = 115
COGS = Expected Sales*80% = 115*80% = 92
Expected profit:
𝐸(𝑃𝑟𝑜𝑓𝑖𝑡) = 𝑝 × 𝑃𝑉(𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝐶𝑜𝑠𝑡) − (1 − 𝑝) × 𝑃𝑉(𝐶𝑜𝑠𝑡)
𝐸(𝑃𝑟𝑜𝑓𝑖𝑡) = 90% × (115 − 92) − (1 − 90%) × 92 = 11.5
Question 10: Given a monthly rate of 1.5%, what is the Effective Annual Rate (EAR)? What is
the Annual Percentage Rate (APR)?
Answer:
Effective Annual Rate (EAR):
𝐸𝐴𝑅 = (1 + 𝑟)𝑡 − 1 = (1 + 1.5%)12 − 1 = 19.56%
Annual Percentage Rate (APR):
𝐴𝑃𝑅 = 𝑟𝑡 = 1.5% ∗ 12 = 18%

Question 11: A company has forecast sales in the first 3 months of the year as follows (figures in
millions): January, $108; February, $120; March, $75. 60% of sales are usually paid for in the month
that they take place and 40% in the following month. Receivables at the end of December were $20
million.
a. What are the forecasted collections on accounts receivable in March?
b. What are the receivable at the end of March?
Answer:
December January February March
Receivables at start of period 20 43.2 48
Sale 108 120 75
108*60%
Sales in current period (60%) = 64.8 72 45
108*40%
Sales in last period (40%) 20 = 43.2 48
64.8 + 20
Total collection = 84.8 115.2 93
108+20-
84.8 =
Receivables at end of period 20 43.2 48 30

Question 12:
1. A supplier offers you credit terms of 2/15, net 45. What is the cost of forgoing the discount
on a $218,400 purchase?
2. Suppose you purchase goods on terms of 2/10, net 50. Taking compounding into account,
what annual rate of interest is implied by the cash discount? (Assume a year has 365 days
and current sale = $100)
 365
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑎𝑚𝑜𝑢𝑛𝑡 𝑒𝑥𝑡𝑟𝑎 𝑑𝑎𝑦𝑠 𝑜𝑓 𝑐𝑟𝑒𝑑𝑖𝑡
𝐸𝐴𝑅 = (1 + ) −1
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡𝑒𝑑 𝑝𝑟𝑖𝑐𝑒
Answer:
1. Discount amount = 218,400*2% = 4,368
Discounted price = 218,400 - 4,368 = 214,032
Extra days of credit = 45 - 15 = 30
Effective Annual Rate (EAR):
365 365
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑎𝑚𝑜𝑢𝑛𝑡 𝑒𝑥𝑡𝑟𝑎 𝑑𝑎𝑦𝑠 𝑜𝑓 𝑐𝑟𝑒𝑑𝑖𝑡 4,368 30
𝐸𝐴𝑅 = (1 + ) − 1 = (1 + ) − 1 = 27.24%
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡𝑒𝑑 𝑝𝑟𝑖𝑐𝑒 218,400
2. Discount amount = 100*2% = 2
Discounted price = 100 - 2 = 98
Extra days of credit = 50 - 10 = 40
Effective Annual Rate (EAR):
365 365
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑎𝑚𝑜𝑢𝑛𝑡 𝑒𝑥𝑡𝑟𝑎 𝑑𝑎𝑦𝑠 𝑜𝑓 𝑐𝑟𝑒𝑑𝑖𝑡 2 40
𝐸𝐴𝑅 = (1 + ) − 1 = (1 + ) − 1 = 20.2%
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡𝑒𝑑 𝑝𝑟𝑖𝑐𝑒 98

Question 13: A local office supply store expects to sell 5,625 printers next year. Annual carrying
cost is $100 per printer, and ordering cost is $50. The company operates 365 days a year.
a. What is the EOQ?
b. How many times per year does the store reorder?
c. What is the length of an order cycle?
d. What is the total annual cost if the EOQ quantity is ordered?

Answer:

2 × 𝑎𝑛𝑛𝑢𝑎𝑙 𝑠𝑎𝑙𝑒𝑠 × 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑜𝑟𝑑𝑒𝑟

𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 (𝐸𝑂𝑄) = √
𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡

2 × 5,625 × 50
𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 (𝐸𝑂𝑄) = √ = 75 (𝑝𝑟𝑖𝑛𝑡𝑒𝑟𝑠)
100

The number of orders: 5,625/75= 75 (times)

The length of an order cycle: 365 days/ 75 = 4.9 days.
The optimal annual order costs = 75  50 = $3,750
Annual carrying costs:
= [(5,625)/2]  (100) = $3,750
Total costs = order costs + carrying costs = $3,750+ $3,750 = $7,500

Question 14: Burnside's has accounts receivable of $33,700, inventory of $54,200, sales of
$364,200, and cost of goods sold of $193,400. How long does it take the firm to sell its
inventory and collect payment on the sale?
Answer:
Inventory turnover = $193,400/$54,200 = 3.57
Days in inventory = 365/3.57 = 102.29 days
Accounts receivable turnover = $364,200/$33,700 = 10.81
Days' sales in receivables = 365/10.81 = 33.77 days