Financial Management Web Project

226 ~~ Part 3 Working Capital Management

ecessary for the increase in the accounts receivable and inventor ances. Taxes e 40 percent of before-tax income.

a. Co to the accounts receivable balance before and the change in the cash discoun licy. Use the net sales (total sales min sh discounts) to determine the average sales.

b. Determine the before and after the ge in the cash discount policy. Translate this into a e inventory nits and dollars) before and after the change in the cash disc polic

c. Complete the following inc atement:

/ \ Before Policy After Policy Change Change.

Net sales (Sale ash discounts) .............................. Cost of goo old ........................................................ Gross pr .................................................................... Gene nd administrative expense ............................. O ting profit ............................................................. Brest on increase in accounts receivable and inventory (14%) .................................

Income before taxes ...................................................... Taxes ............................................................................. Income after taxes .........................................................

d. Should the new cash discount policy be utilized? Briefly comment.

W EB E X E R C I S E

1. One of the items discussed in this chapter was the impact of the Internet on working capital management. Ariba and Perfect Commerce are two companies at the forefront of the B2B trend. Go to the Perfect Commerce website at www.perfect.com.

2. Click on "About Perfect" and then click ̀ About Perfect Commerce." Read the ~ description, and in one short paragraph, describe what Perfect Commerce does.

3. Click on "Customers" and list five of its key customers. 4. Click on "Source to Contract." Click on "Perfect Source." Write down the three

key applications with a sentence about each.

Note: Occasionally a topic we have listed may have been deleted, updated, or moved into a different location on a website. If you click on the site map or site index, you will be introduced to a table of contents that should aid you in finding the topic you aze looking for.