Exam 20: Short Term Financial Planning

Matt's Machine Company has borrowed $10 million for four months at 5.5% APR,using inventory stored in a field warehouse as collateral.The warehouse fee is 0.5%,payable at the beginning of the loan.What is Matt's EAR?

Use the information for the question(s) below. Azamel Cosmetics specializes in cosmetics which have high levels of UV protection. The above figures show the anticipated sales over the next four quarters. Azamel carries inventory equal to 30% of next quarter's sales, has accounts payable of 20% of next quarter's sales, and accounts receivable of 25% of this quarter's sales. -If its net income is 12% of sales,in which quarter(s)is it expected that Azamel's seasonal working capital needs will be the smallest?

Which of the following is a committed line of credit with no fixed maturity?

Use the information for the question(s) below. Glenside Industries is a domestic machinery manufacturer which specializes in the production of snowblowers. The above figures show the anticipated sales over the next four quarters. Glenside carries inventory equal to 25% of next quarter's sales, has accounts payable of 15% of next quarter's sales, and accounts receivable of 23% of this quarter's sales. -If its net income is 10% of sales,in which quarter(s)is it expected that Glenside's seasonal working capital needs will be the greatest?

Bradford Maintenance,a firm that provides lawn care services,has some seasonal variations in its cash flow needs,since much of the demand for its services is in the summer months.It uses long-term sources of funds to finance its assets such as its fleet of vehicles and lawn-care equipment and for the permanent funds that it must have at all times.For its peak seasonal needs it uses some short-term debt.What best describes the financial policy being followed by Bradford?