Liberty BUSI 320 Chapter 4 Reading Assignment Answers Complete Solutions
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A firm wishes to maintain a cash balance of $8,000 at all times. The cash budgets reveals that the firm will go below this amount in the month of May. To maintain the desired cash balance, the firm must .
True or false: The generation of sales and profits ensures adequate cash on hand to meet financial obligations.
A company has forecasted sales of $50,000 in January, $40,000 in February, and $60,000 in March. All sales are on credit with 50% collected in the month of the sale, 30% collected in the month following the sale, and the remaining amount collected in the second month after the sale. After collections are made in the month of March, what will the accounts receivable balance be?
It is crucial that a firm ensure that adequate cash is available to _____.
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A firm that does not wish to borrow to meet anticipated sales growth may instead decide to
A firm using the FIFO inventory accounting method has beginning inventory of 300 units at a cost of $15 each. During the period the firm produced 700 units at a cost of $17 each. If the firm sold 800 units during the period, what is the value of the ending inventory.
The importance of the pro forma income statement is to provide a projection of how much _____ is anticipated over the ensuing time period.
The information used to prepare the pro forma balance sheet comes from the following:
Assuming the break-even point has been surpassed, a firm that utilizes a low degree of operating leverage will produce ______ profit compared to a firm that utilizes a higher degree of operating leverage
At high levels of operation, the potential profit for a firm that is highly leveraged is ______________ compared to those of a firm that is not highly leveraged.
At high levels of operation, the profit potential for a firm that is not highly leveraged is _______ compared to that of a highly leveraged firm.
Besides depreciation, what other noncash items can be adjusted when using cash break-even analysis?
Break-even analysis is used to answer which of the following questions?
The break-even point is:
Cash break-even analysis is helpful in analyzing the __________ outlook of the firm, particularly when the firm may be in trouble.
A company employing heavy financial leverage has a cost to borrow of 8% and return on assets of 10%. As EBIT increases the firm will greatly expand its _____________
A company that has the ability to increase sales with its current plant and equipment is said to be:
A company anticipates monthly sales of $300,000 for the months of April, May, June, and July. Materials represent 50% of sales, and because of level production, material purchases will be equal for each month. Materials are paid for one month after the month purchased. Labor costs are $16,000 in April, $19,000 in May, $16,000 in June, and $21,000 in July. Fixed overhead is $12,000 per month. General and administrative expenses are $2,000 per month, interest expense of $2,500 is paid in May, and new equipment of $10,000 is also purchased in May. What are the company’s total cash payments in May?