Business

Business

Chapter 12: Jen and Larry’s Frozen Yogurt Mini Case p. 452 B.
If inventories are expected to turn over ten times a year (based on cost of goods sold), what will be the venture’s average inventories balance next year if sales are $1.2 million? How much might the venture be able to borrow if a lender typically lends an amount equal to 50 percent of the average inventories balance? If the borrowing rate is 12 percent, how much dollar amount of interest would have to be paid on the loan?
C. How might the venture acquire and finance the new equipment that is needed?
D. Identify potential government credit resources for the venture.
E. Prepare a summary of the benefits and risks of Jen and Larry’s continued use of credit card financing.
F. Prepare a summary of how the venture might benefit from receivables financing if commercial customers are extended credit for thirty days on their purchases.
G. Discuss the impact of potential loan restrictions should the venture seek commercial loan financing.
H. Comment on how the venture might be evaluated in terms of the five Cs of credit