Finance Assignment

1.     Supposeacompanyhasacurrentratioof2.5timesandaquickratioof1.5times.Ifthe company’scurrentliabilitiesare€ 100million,theamountofinventoryis:

2.     Giventhefollowingfinancialstatementdata,calculatethenetoperatingcycleforthis company.

Thenetoperatingcycleofthiscompanyis:

3.     Thebondequivalentyieldfora182-dayU.S.Treasurybillthathasapriceof$9,725per $10,000facevalueis:

4.     Suppose a company uses trade credit with the terms of 2/10, net 50. If the company pays their account on the 50th day, the effective borrowing cost of skipping the discount on day 10 is:

5.     William Jones is evaluating three possible means of borrowing $1 million for one month:1) Drawing down on a line of credit at 7.2% with a 1⁄2% commitment fee on the full amount with no compensating balances; 2) A banker’s acceptance at 7.1%, an all-inclusive rate; or 3) Commercial paper at 6.9% with a dealer’s commission of 1 4% and a backup line cost of 1 3%, both of these would be assessed on the $1 million of commercial paper issued. Which of these forms of borrowing results in the lowest cost of credit? Show the calculations to determine the lowest cost of the three options listed