Time Is 10:12 Pm Texas Time I Need The Answers In One Hour

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Time is 10:12pm Texas time. I need the answers in one hour so I can submit my homework. The price I am offering is $5.00. Please read the instruction first before you send me any handshake. I am not negotiating for the price.

You can post your answers now so I can buy them already or send me handshake but please make sure to read my instruction properly. I need this tonight at 11:00 pm august 31, 2014. Thanks. Week 9 Homework Chapter 15: P1 Pretty Lady Cosmetic Products has an average production process time of forty days. Finished goods are kept on hand for an average of fifteen days before they are sold.

Accounts receivable are outstanding and an average of thirty-five days, and the firm receives forty days of credit on its purchases from suppliers. a. Estimate the average length of the firm’s short-term operating cycle. How often would be the cycle turn over in a year? b. Assume net sales of $1,200,000 and cost of goods sold of $900, 000. Determine the average investment in accounts receivable, inventories, and accounts payable.

What would be the net financing need considering only these three accounts? Chapter 16: P3 Obtain a current issue of the federal Reserve Bulletin, or review a copy from the Fed’s Web site ( ) or the St. Louis Fed’s Web site ( ), and determine the changes in the prime rate that have occurred since the end of 2000. Comment on any trends in the data. P4 Compute the effective cost of not taking the cash discount under the following trade credit terms: a.

2/10 net 40 b. 2/10 net 50 c. 3/10 net 50 d. 2/20 net 40

Paper For Above instruction

The homework assignment encompasses two primary chapters—Chapter 15 and Chapter 16—and involves a series of quantitative analyses related to short-term financial management and credit terms. The first part (Chapter 15, P1) requires estimating the short-term operating cycle of Pretty Lady Cosmetic Products, calculating its turnover frequency, and determining the associated investments and net financing needs based on given sales and cost data. The second part (Chapter 16) involves analyzing trends in the federal reserve prime rate since 2000, and computing the effective cost of forgoing cash discounts under various credit terms.

This paper systematically addresses each task, employing financial formulas and conceptual understanding. The analyses are relevant for understanding working capital management, credit policy implications, and economic trend interpretation within a corporate financial context.

Analysis of Chapter 15: Short-term Operating Cycle and Financial Needs

The first exercise involves the estimation of the average length of Pretty Lady Cosmetic Products' short-term operating cycle. This cycle encompasses the inventory period, accounts receivable period, and accounts payable period. Based on provided data:

• Production process time: 40 days
• Inventory holding period: 15 days
• Accounts receivable period: 35 days
• Accounts payable period: 40 days

The operating cycle is calculated by summing the inventory and receivable periods:

Operating cycle = Inventory period + Receivables period = 15 + 35 = 50 days

The number of cycles per year is given by dividing the total days in a year (assuming 365 days) by the cycle length:

Cycle turnover annually = 365 / 50 ≈ 7.3 times

Next, to determine the firm's average investments in receivables, inventories, and payables:

• Accounts receivable investment = (Net sales / 365) × Receivables period = ($1,200,000 / 365) × 35 ≈ $115,068.49
• Inventory investment = (Cost of goods sold / 365) × Inventory period = ($900,000 / 365) × 15 ≈ $36,986.30
• Accounts payable = (Cost of goods sold / 365) × Payables period = ($900,000 / 365) × 40 ≈ $98,630.14

The net financing need, considering only these accounts, entails the net investment:

Net financing need = Accounts receivable + Inventory − Accounts payable ≈ $115,068.49 + $36,986.30 - $98,630.14 ≈ $53,424.65

Analysis of Chapter 16: Trends in Prime Rate and Cost of Credit

The second exercise focuses on analyzing changes in the prime rate since the year 2000 using recent Federal Reserve data. Historically, the prime rate tends to fluctuate due to macroeconomic factors, monetary policy adjustments, and economic cycles. Since 2000, the prime rate experienced notable decreases during economic downturns, such as the 2008 financial crisis, with subsequent gradual increases during periods of recovery.

Specifically, post-2000 changes include a significant decline from around 8.25% at the end of 2000 to a low of 3.25% in 2004, and a sharp decline again during the 2008 crisis, reaching as low as 3.25% in December 2008. Post-2008, rates remained relatively low for several years, with some moderate increases leading up to 2018, where the rate hovered around 4.75%-5.25%. These trends reveal the Federal Reserve’s responsiveness to economic conditions, emphasizing easing during downturns and tightening during growth periods.

The third exercise involves calculating the effective annual cost of not taking cash discounts under various credit terms, emphasizing the opportunity cost of delaying payment. The formulas compare the discounted terms to the net period to determine the implied annualized rate:

• For example, for 2/10 net 40:
• Effective cost = [(Discount %) / (1 − Discount %)] × (365 / (Net period − Discount period))

Applying these calculations:

• 2/10 net 40: Effective annual cost ≈ [(2/98)%] × (365 / 30) ≈ 25.33%
• 2/10 net 50: Effective cost ≈ [(2/98)%] × (365 / 40) ≈ 19.0%
• 3/10 net 50: Effective cost ≈ [(3/90)%] × (365 / 40) ≈ 30.56%
• 2/20 net 40: Effective cost ≈ [(2/98)%] × (365 / 20) ≈ 37.45%

These findings illustrate that the cost-effectiveness of early payment varies with the specific terms, and firms may weigh the opportunity costs when negotiating credit terms.

Conclusion

The detailed calculations demonstrate fundamental principles of working capital management and credit analysis. Estimating operating cycle components helps firms optimize cash flow and inventory management, while understanding trends in macroeconomic rates guides strategic financial decisions. Additionally, calculating the effective cost of credit terms underscores the importance of careful negotiation and financial planning to minimize costs and improve liquidity.

References

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