公司金融课后题答案CHAPTER 28

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1、CHAPTER28CREDITANDINVENTORYMANAGEMENTAnswerstoConceptsReviewandCriticalThinkingQuestions1.a.Asightdraftisacommercialdraftthatispayableimmediately.b.Atimedraftisacommercialdraftthatdoesnotrequireimmediatepayment.c.Abankersacceptanceiswhenabankguaranteesthefu

2、turepaymentofacommercialdraft.d.ApromissorynoteisanIOUthatthecustomersigns.e.Atradeacceptanceiswhenthebuyeracceptsthecommercialdraftandpromisestopayitinthefuture.2.Tradecreditisusuallygrantedonopenaccount.Theinvoiceisthecreditinstrument.3.Creditcosts:costof

3、debt,probabilityofdefault,andthecashdiscountNo-creditcosts:lostsalesThesumofthesearethecarryingcosts.4.1.Character:determinesifacustomeriswillingtopayhisorherdebts.2.Capacity:determinesifacustomerisabletopaydebtsoutofoperatingcashflow.3.Capital:determinesth

4、ecustomer’sfinancialreservesincaseproblemsoccurwithoperatingcashflow.4.Collateral:assetsthatcanbeliquidatedtopayofftheloanincaseofdefault.5.Conditions:customer’sabilitytoweatheraneconomicdownturnandwhethersuchadownturnislikely.5.1.Perishabilityandcollateral

5、value2.Consumerdemand3.Cost,profitability,andstandardization4.Creditrisk5.Thesizeoftheaccount6.Competition7.CustomertypeIfthecreditperiodexceedsacustomer’soperatingcycle,thenthefirmisfinancingthereceivablesandotheraspectsofthecustomer’sbusinessthatgobeyondt

6、hepurchaseofthesellingfirm’smerchandise.6.a.B:Aislikelytosellforcashonly,unlesstheproductreallyworks.Ifitdoes,thentheymightgrantlongercreditperiodstoenticebuyers.b.A:Landlordshavesignificantlygreatercollateral,andthatcollateralisnotmobile.c.A:SinceA’scustom

7、ersturnoverinventorylessfrequently,theyhavealongerinventoryperiod,andthus,willmostlikelyhavealongercreditperiodaswell.d.B:SinceA’smerchandiseisperishableandB’sisnot,Bwillprobablyhavealongercreditperiod.e.A:Rugsarefairlystandardizedandtheyaretransportable,wh

8、ilecarpetsarecustomfitandarenotparticularlytransportable.7.Thethreemaincategoriesofinventoryare:rawmaterial(initialinputstothefirm’sproductionprocess),work-in-progress(partiallycompletedproducts),andfi