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    1) Brown's Furniture has an operating cycle of 175.36 days, calculated as accounts receivable period (45 days) plus inventory period (130.36 days) minus accounts payable period (96 days). 2) For Harry Joiner, the cash cycle is 30.29 days, calculated as inventory period (45.06 days) plus receivables period (38.02 days) minus payables period (23.25 days). 3) For Dashing Style Store, the economic order quantity is 386 units. This minimizes total inventory costs compared to the current order quantity of 700 units by lowering carrying costs and ordering/setup costs.

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    1) Brown's Furniture has an operating cycle of 175.36 days, calculated as accounts receivable period (45 days) plus inventory period (130.36 days) minus accounts payable period (96 days). 2) For Harry Joiner, the cash cycle is 30.29 days, calculated as inventory period (45.06 days) plus receivables period (38.02 days) minus payables period (23.25 days). 3) For Dashing Style Store, the economic order quantity is 386 units. This minimizes total inventory costs compared to the current order quantity of 700 units by lowering carrying costs and ordering/setup costs.

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    © All Rights Reserved
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    33 views2 pages

    PDF Document

    Uploaded by

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    1) Brown's Furniture has an operating cycle of 175.36 days, calculated as accounts receivable period (45 days) plus inventory period (130.36 days) minus accounts payable period (96 days). 2) For Harry Joiner, the cash cycle is 30.29 days, calculated as inventory period (45.06 days) plus receivables period (38.02 days) minus payables period (23.25 days). 3) For Dashing Style Store, the economic order quantity is 386 units. This minimizes total inventory costs compared to the current order quantity of 700 units by lowering carrying costs and ordering/setup costs.

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    © All Rights Reserved
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    of 2

    BFM/FBFM 1024 FINANCIAL MANAGEMENT

    SUBMISSION 7 : WORKING CAPITAL MANAGEMENT

    1. Brown's Ferry Furniture Outlet has an accounts receivable period of 45 days and an
    accounts payable period of 96 days. The company turns over its inventory 2.8 times per
    year and marks up the inventory an average of 45 percent over its wholesale cost. What is
    the length of the firm's operating cycle?

    2. Harry Joiner, Inc. currently has an inventory turnover of 15.7, a payables turnover of 9.6,
    and a receivables turnover of 8.1. How many days are in the cash cycle?

    3. Dashing Style Store expects to sell 700 of its designers suits every week. The store is
    open seven days a week and expects to sell the same number of suits every day. The
    average selling price per suit is RM 880, the carrying cost per suits is RM 88 and the
    fixed order cost is RM 180. &1-chp+1-7 (Test1) (calculation) (NPV, higher better)
    (capital budgeting)
    a. What is the total carrying cost? Q2-chpt (theory (
    structure) (WACC)
    03
    ~chpt(capital
    b. What is the restocking cost? capital) (E00) (0(d()
    Q4 chp+(working
    c. What is the total cost?
    d. What is the economic order quantity for Dashing Style Store?
    e. Is Dashing Style Store having an optimal inventory policy in terms of inventory
    cost, order size and order frequency. Justify your answer by showing the details
    working by comparing using the current quantity order and the EOQ.

    (d)EO:E00x5x
    (2) TC130800+9360
    (b) TRC=(F) (a)
    (0x) (x) =
    $40160#
    (a) Tx
    -(150)(*
    =

    -(2) (88) 9360


    =

    88
    =$30800

    =385,89 & 386 units

    (e) current:700 EOQ:386


    - -

    x
    ?,8 (150) (94.50)
    =

    +
    cost 40160
    Inventory =>
    33938
    16984 16974
    =

    =
    +

    order size=> 700 386

    52 weekly
    Ya= *2
    order frequency=> =

    94.30
    =94
    since i
    [1 71
    to
    1) OC:In Period Period
    AIR
    +

    In Period
    -

    =130.36 +45 days

    =175.36 days -
    =130.36 days
    CC 0C
    =
    -

    Alp Period

    175.36
    :
    -

    96

    =79.36 dayS #

    Period
    2) C 0C =
    - AIP

    AIR A/P
    -Inventory ~

    period
    period
    A
    Period

    +-

    :23.25
    +
    45.06-38.02
    =30.29 days

    TRC
    TC:TCC
    +

    =(a(2)(() (F)(Ya) +

    ~sales/order
    per year

    EOR:
    IFFixedperder

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