1. AATROX ENTERPRISES is considering whether to pursue a restricted…

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Question Answered step-by-step 1. AATROX ENTERPRISES is considering whether to pursue a restricted… 1. AATROX ENTERPRISES is considering whether to pursue a restricted or relaxed current assetinvestment policy. The firm’s annual sales are P400,000; its fixed assets are P100,000; debt andequity are each 50 percent of total assets. EBIT is P36,000, the interest rate on the firm’s debt is 10percent, and the firm’s tax rate is 40 percent. With a restricted policy, current assets will be 15percent of sales. Under a relaxed policy, current assets will be 25 percent of sales. What is thedifference in the projected ROEs between the restricted and relaxed policies?A. 1.6% C. 5.4%B. 3.8% D. 6.2%2. AHRI CORP.’s total assets fluctuate between P320,000 and P410,000, while its fixed assets remainconstant at P260,000. If the firm follows a maturity matching or moderate working capital financingpolicy, what is the likely level of its long-term financing?A. P 90,000 C. P320,000B. P260,000 D. P410,0003. AKALI CORP. purchases raw materials on July 1. It converts the raw materials into inventory bySeptember 30. However, AKARI pays for the materials on July 20. On October 31, it sells the finishedgoods inventory. Then, the firm collects cash from the sale 1 month later on November 30. If thissequence accurately represents the average working capital cycle, what is the firm’s cash conversioncycle in days?A. 92 days. C. 133 days.B. 123 days. D. 153 days.4. ALISTAR COMPANY writes checks averaging P15,000 a day, and it takes five days for these checks toclear. The firm also receives checks in the amount of P17,000 per day, but the firm loses three dayswhile its receipts are being deposited and cleared. What is the firm’s net float in dollars?A. P 24,000 C. P 75,000B. P 32,000 D. P126,0005. What is the opportunity cost of keeping a cash balance of P2 million, if the daily interest rate is 0.02%and the average transaction cost of investing money overnight is P50?A. P50 C. P400B. P350 D. P40,000 Accounting Business Financial Accounting Share QuestionEmailCopy link Comments (0)