What is the implied cost (interest rate) of skipping a 2% discount on suppliers for a $1,000 invoice? (Easy: check out Section 15-9 in the textbook) (0.5 pts.)Given what you have learned about working

  • What is the implied cost (interest rate) of skipping a 2% discount on suppliers for a $1,000 invoice? (Easy: check out Section 15-9 in the textbook) (0.5 pts.)
  • Given what you have learned about working capital management and financial planning, is Nelson’s Jones’ estimate that a $350,000 line of credit will be sufficient for 2007 accurate? (7 pts.)
  • Create an Excel workbook with forecasted balance sheet, income statement and cash flow for 2007
  • Assume two scenarios, 1) with discounts from suppliers taken and 2) without
  • Based on Jones’ net income for 2006 and assuming it is constant going forward, how long will it take for Jones to pay off a $350,000 loan? (0.5 pts.)
  • What could Jones do to reduce the size of the line of credit he needs? (2 pts.)
    • Support your recommendation(s)
    • (Hint: What rate of growth can Jones pursue that is sustainable? Does he need to change his capital structure?)

Assumptions

1.Sales volume for 2007 will be $2.7m

2.The historical relations that prevailed in 2004-06 will continue in 2007.

1.Operating expense remains at 15.5% of sales

2.Interest expense is assumed to be flat at $31,000

3.Accounts receivable remains at 43 days of sales.

4.Inventory remains at 76 days of COGS

5.$24,000 of long-term debt principal is repaid during 2007

6.Cash, PP&E, Accrued expenses dollar balances are unchanged in 2007.  In the case of PP&E this assumes that depreciation = capex in 2007.

3.COGs will be flat at 81.1% if Jones takes 100% of the discounts available in 2007 but will increase 2.0% to 83.1% in 2007 if Jones does not take the discounts available.

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more