SAIGON INSTITUTE OF TECHNOLOGY SMALL BUSINESS MANAGEMENT CLASS FALL SEMESTER 2011

QUESTIONS FOR FINAL EXAM

Time allowed: 90 minutes; Materials NOT allowed; Please select 2 out of the following 3 questions. QUESTION 1 (20 POINTS): Below are extracts from Company As financial statement for 2010. BALANCE SHEET
No. A. ASSETS A.1 1.1 1.2 1.3 1.4 A. 2 2.1 2.2 2.3 2.4 CURRENT ASSETS Cash Account receivables Inventory Other current assets LONG-TERM ASSETS Long-term receivables Tangible fixed assets Intangible fixed assets Other long-term assets TOTAL ASSETS B. RESOURCES B. 1 1.1 1.1.1 1.1.2 1.1.3 1.2 B. 2 2.1 2.2 LIABILITIES Current liabilities Short-term borrowings Account payable Other current libilities Long-term liabilities OWNER'S EQUITY Paid-up capital Retained earnings TOTAL RESOURCES 6,500,000 4,500,000 3,360,000 940,000 200,000 2,000,000 2,000,000 8,500,000 9,000,000 (500,000) 15,000,000 5,500,000 4,100,000 2,000,000 1,300,000 800,000 1,400,000 1,400,000 11,500,000 9,000,000 2,500,000 17,000,000 6,100,000 1,000,000 1,580,000 1,928,000 1,592,000 8,900,000 2,000,000 3,000,000 2,500,000 1,400,000 15,000,000 9,850,000 350,000 4,500,000 4,000,000 1,000,000 7,150,000 1,200,000 3,100,000 2,000,000 850,000 17,000,000 Items Dec 31, 2009 Dec 31, 2010
No. 2 4 6 8

INCOME STATEMENT
Descriptions Cost of goods sold SG&A Interest expenses Corporate income tax Amount 20,000,000 13,000,000 7,000,000 2,000,000 5,000,000 1,000,000 4,000,000 1,000,000 3,000,000

1 Net sales 3 Gross profits 5 Operating profits 7 Profit before tax 9 Net profit after tax

1.2.1 Long-term borrowings

1. Please compute Company As following financial ratios (6 points): Account Receivables (A/R) turnover, and number of days in A/R (2 points) Account Payables (A/P) turnover, and number of days in A/P (2 points) Inventory turnover, and number of days in inventory (2 points) 2. Please compute Company As cash conversion cycle (6 points.) 3. Assuming the same net profit margin as that in 2010, if Company A targets US$ 25,000,000 for sales in 2011, what is Company As credit line requirement? (8 points)

Question 2 and Question 3 are based on the information below: Tuan is planning to set up his own company after graduation from college. His business idea is to import wines from France, where his uncle is living, and to sell them in Hochiminh City. After talking to his uncle and doing a desk research on wine business, Tuan has collected the following data: Average purchase price of a typical bottle of wine: VND 100,000 (CIP Hochiminh City Port, and including all fees and charges to make the wines available at Tuans warehouse) Average cost of storing a bottle of wine in the warehouse until it is sold: VND 5,000 Projected number of bottles of wine that Tuan plans to sell in the first year: 500,000 bottles

Estimated cost of ordering per time: VND 1,000,000 / time Lead time (number of days taken for the wine to be delivered to Tuans warehouse since the date of ordering): 30 days Selling rate: 50 bottles / day Safety stock level: 500 bottles

QUESTION 2 (20 POINTS): 1. 2. What is Economic Order Quantity (6 points) If Tuan wants to minimize his inventory costs, how many bottles of wine that Tuan should order per time? (14 points)

QUESTION 3 (20 POINTS): 1. 2. What is re-order point? (6 points) Please compute Tuans re-order point (14 points)