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Financial Management assignment 1 - Essay Example

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Short term lenders will be very much interested in the liquidity of the company or its ability to pay its current liabilities with its liquid assets. Ratios in this category are: current ratio which measures the proportion of the current assets with current liabilities; and quick assets which assesses the liquidity of company by taking out the inventory and comparing the current assets to immediate obligations.
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Financial Management assignment 1
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Download file to see previous pages Long-term lenders will also be interested on the long-term profitability of the organization.
Stockholders will be interested on shareholder ratios like return on equity, earnings per share, and dividend yield. These ratios became the sole measure of the profitability of the stock. Stockholders also look at the company's leverage through its debt to assets and debt to equity ratios. Companies which are highly dependent on debt faces higher risks.
Question 5.
a. Monthly Schedule of Cash Receipts
Cash Receipts for April
From Sales (10%) $7,500
March (60%) $42,000
February (30%) $18,000
Total $67,500
Cash Receipts for May
From Sales (10%) $9,500
April (60%) $45,000
March (30%) $21,000
Total $75,500
Cash Receipts for June
From Sales (10%) $11,000
May (60%) $57,000
April (30%) $22,500
Total $90,500

b. Accounts Receivables at end of June
May (30%) $28,500
June (60%) $66,000
Total $94,500
Question 6.
A Company (LIFO)
Value of Cost of Goods Sold
100 units @ $12 each $1,200
200 units @ $11.50 each $2,300
100 units at $10.50 each $1,050
Total $4,550
Value of Ending Inventory
100 units @ $10 each $1000
100 units @ $10.50 each $1050
Total $2050
Z Company (FIFO)
Value of Cost of Goods Sold
100 units @ $10 each $1000
200 units @ $10.50 each $2100
100 units @ $11.50 each $1150
Total $4250
Value of Ending Inventory
100 units @ $11.50 each $1150
100 units @ $12 each $1200
Total $2350
Question 7.
Tall Tree
Percentage of Sales Table
$300,000 Sales
Assets Liabilities
Cash 5% Accounts Payable (90) 30%
Accounts Receivable 30% Notes Payable (30) 10%
Inventory 20% Accrued Expenses (7.5) 2.5%
Currents Assets 55% Current Liabilities 42.5%
Equipments 25% Common Stock (127.5) 42.5%
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