Aurora Electrical Company of Yellowknife ships wind turbines throughout the country. Mr. Beam, the financial manager, has determined that through the establishment of local collection centres around the country, he can speed up the collection of payments by two days. Furthermore, the cash management department of the company's bank has indicated to him that he can defer payments on his accounts by one day without offending suppliers. The bank has a remote disbursement centre in New Brunswick. a. If Aurora Electrical Company has $2.45 million per day in collections and $1.09 million per day in disbursements, how many dollars will the cash management system free up? (Enter the answer in dollars not in millions.) Freed-up funds $ b. If Aurora Electrical Company can earn 7% percent per annum on freed-up funds, how much income can be generated? (Enter the answer in dollars not in millions.) Interest on freed-up cash c. If the total cost of the system is $420,000 should it be implemented? ○ No ○ Yes
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- Aurora Electrical Cormpany of Yellowknife ships wind turbines throughout the country. Mr. Beam, the financial manager, has determined that through the establishment of local collection centres around the country, he can speed up the collection of payments by two days Furthermore, the cash management department of the company's bank has indicated to him that he can defer payments on his accounts by one day without offending suppliers. The bank has a remote disbursement centre in New Brunswick. a. If Aurora Electrical Company has $1.5 million per day in collections and $0.8 million per day in disbursements, how many dollars will the cash management system free up? (Enter the answer in dollars not in millions.) Freed-up funds S (6760000 b. If Aurora Electrical Company can earn 4 percent per annum on freed-up funds, how much income can be generated? (Enter the answer in dollars not in millions.) Interest on freed-up cash 473000 c. If the total cost of the system is $125,000, should it be…Neon Light Company of Kansas City ships lamps and lighting appliances throughout the country. Ms. Neon has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by one and one-half days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments on her accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Florida. a. If Neon Light Company has $2.30 million per day in collections and $1.06 million per day in disbursements, how many dollars will the cash management system free up? (Enter your answer in dollars not in millions (e.g., $1,234,567).) Freed-up funds b. If Neon Light Company can earn 9 percent per annum on freed-up funds, how much will the income be? (Enter your answer in dollars not in millions (e.g., $1,234,567).) Interest on freed-up cash c. If the total cost of the new system is $405,000, should it be…Neon Light Company of Kansas City ships lamps and lighting appliances throughout the country. Ms. Neon has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments on her accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Florida.
- Currently James Corporation is using a decentralized collection system whereby customers mail their checks to one of the firm’s eight regional locations. Its annual sales are $150 million. Checks are deposited each business day in a local bank and the amount of the deposit is sent to the firm’s concentration bank in Dallas. The average time between deposit in the local bank and the availability of those funds, in Dallas, to Riley is 6 days. James has determined that the use of wire transfers would reduce the float by four days, but the transfer will cost $15.00. If transfers will be made on each of the 250 days that banks are open, should Riley switch to the wire transfer system? Assume that James can earn 6% on the funds released through this more efficient transfer.Osborne Shipbuilding Company, located in Baton Rouge, receives large remittances from its customers in New York and California. If the firm deposits these checks in its local bank, two business days are required for the checks toclear and the funds to become usable by the firm. However, if Osborne sends an employee to New York or Californiaand presents the check for payment at the bank upon which it is drawn, the funds are available immediately to thefirm. The firm can earn 8% per annum on short-term investments, and the cost of sending an employee to New Yorkor California to present the check for payment is $500. What is the net benefit to the firm of employing this specialhandling technique for a $5 million check received on Tuesday? (Assume 365 days per year.)Ralph Taylor, a nationwide department store chain, currently processes all of its credit sales payments at its St. Louis headquarters. The firm is considering the establishment of a lockbox arrangement with a Los Angeles bank to process payments from its customers in 10 western states. With the lockbox system, average mailing time for customers from this region would be reduced from 4 days to 1 day. Check-clearing time would also be reduced from 4 days to 1 day. Annual collections from the western region are $285 million. Establishment of this lockbox system would reduce the compensating balance requirement at the firm's St. Louis bank by $350,000 and reduce annual payment processing costs at the St. Louis office by $75,000. Funds released by the lockbox arrangement can be invested elsewhere in the firm to earn 5% before taxes. The Los Angeles bank has agreed to process Ralph Taylor's customer payments for an annual fee of $185,000. What are the annual net pretax benefits to Ralph…
- BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…
- You are the manager of Synlait. Your accountant has indicated that one of the milking machines worth $1m needs to be replaced. You as the manager are required to agree to and sign off the purchase of a replacement machine priced at $25m. Before you make the decision, you need to understand the impact of the purchase and its financing on the financial statements. The milking machine will be financed by paying 20% in cash and the balance as a signed note agreeing to pay the balance at the end of the year. Interest of 5% p.a. will start accruing in the month following the purchase. The old machine will be sold for cash of $1m. Indicate, using the accounting equation, the impact of this transaction on the Balance Sheet and Income Statement. That is, the impact of the sale of the old machine, the purchase of the replacement machine and the first month of interest, but you can ignore depreciation.BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…ABC bank has 13 branches spread throught the country, each with its own minicomputer where its data are stored. Another bank, XYZ Bank, has 10 branches spread throughout the country, with data being stored on a mainframe in Makati. Which system do you think is more vulnerable to unauthorized access? Excessive losses from disaster?