GIALOGO, JESSIE LYN

TEST I
1. Operational Inventory level
2. Abc Method
3. Float
4. Working capital management
5. Temporary current asset
6. Capital Budgeting
7. Mutually Exclusive Projects
8. Initial investment
9. Payback period
10. Net Present Value

TEST II

1. Proposal Generation
2. Review and Analysis
3. Decision Making
4. Implementation
5. Follow-up
6. Turnover Inventory as quickly as possible without stock outs that result in lost sales
7. Collect receivables as quickly as possible without losing sales from high pressure techniques
8. Pay accounts as slowly as possible without damaging the firm’s credit rating
9. Manage mail, processing and clearing time to reduce them with collecting from customers and
increase them with paying vendors
10. Average payment period
11. Average collection period
12. Average age of inventory
13. To expand
14. To replace
15. To renew fixed assets

TEST III

1. Operating cycle = AAI + ACP = 120 days + 60 days = 180 days

2. Cash conversion cycle= 180 days – 45 days = 135 days
3. Total resources in CCC
Inventory Turnover=
30000000 * 60% = 18,000,00
18,000,000/ 360 = 50,000
50,000 * 120 = 6,000,000
 Accounts Receivable=

30,000,000/ 360 = 83,333 * 60 = 4,999,980

Accounts Payable=

35, 000,000 * 60% * 50% * 4/360 = 2, 125, 000

Total Resources in CCC= 6,000,000 + 5,000,000 – 1, 125,000

= 9,875,000

4. INVENTORY =120 – 20 = 100 days inventory

=50,000,000 * 100
= 5,000,000
RECEIVABLE= 60-5 = 55 days receivable
= 83,333 * 55
= 4,583,315

TEST IV

a. For project A, (Annuity cashflows)

Pay back period = 550000/178000 = 3.0 years

For project B
Payback period= 154,000 + 132,000=286,000
358,000 – 286,000= 72,000
72,000/105,000= .68
.68 + 2 = 2.68 years

b. Project A is only acceptable since it is positive. Project A is preferable to project B as it

has a higher NPV of 45 656 comparing to B of 10 000 negative. Having a positive net
present value means the project promises a rate of return that is higher than the
minimum rate of return required by management . The net present value method is
used not only to evaluate investment projects that generate cash inflow but also to
evaluate investment projects that reduce costs.