Helen Bowers, owner of Helen’s Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017.

$$\begin{matrix} \text{May 2016} & \text{\$ 180.000}\\ \text{June} & \text{180.000}\\ \text{July} & \text{360.000}\\ \text{August} & \text{540.000}\\ \text{September} & \text{720.000}\\ \text{October} & \text{360.000}\\ \text{November} & \text{360.000}\\ \text{December} & \text{90.000}\\ \text{January 2017} & \text{180.000}\\ \end{matrix}$$

Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials:

$$\begin{matrix} \text{May 2016} & \text{\$ 90.000}\\ \text{June} & \text{90.000}\\ \text{July} & \text{126.000}\\ \text{August} & \text{882.000}\\ \text{September} & \text{306.000}\\ \text{October} & \text{234.000}\\ \text{November} & \text{162.000}\\ \text{December} & \text{90.000}\\ \end{matrix}$$

General and administrative salaries are approximately $27,000 a month. Lease payments under long-term leases are$9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are$2,700 a month. Income tax payments of $63,000 are due in September and December. A progress payment of$180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of$90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2016. b. Prepare monthly estimates of the required financing or excess funds—that is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers’ sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the company’s current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firm’s ability to obtain bank credit? Explain.

Leyton Lumber Company has sales of $12 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are$1.5 million. What is Leyton’s DSO, what would it be if all customers paid on time, and how much capital would be released if Leyton could take action that led to on-time payments?

Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 55; and it currently pays on the 5th day and takes discounts. Lancaster plans to expand, which will require additional financing. If Lancaster decides to forgo discounts, how much additional credit could it obtain, and what would be the nominal and effective cost of that credit? If the company could get the funds from a bank at a rate of 9%, interest paid monthly, based on a 365-day year, what would be the effective cost of the bank loan? Should Lancaster use bank debt or additional trade credit? Explain.

Fisher-Gardner Corporation (FGC) began operations 5 years ago as a small firm serving customers in the Chicago area. However, its reputation and market area grew quickly. Today FGC has customers all over the United States. Despite its broad customer base, FGC has maintained its headquarters in Chicago, and it keeps its central billing system there. On average, it takes 7 days from the time customers mail in payments until FGC can receive, process, and deposit them. FGC would like to set up a lockbox collection system, which it estimates would reduce the time lag from customer mailing to deposit by 2 days—bringing it down to 5 days. FGC receives an average of $2,300,000 in payments per day. a. How much free cash would FGC generate if it implemented the lockbox system? Would this be a one-time cash flow or a recurring one, assuming the company ceases to grow? How would growth affect your answer? b. If FGC has an opportunity cost of 6%, how much is the lockbox system worth on an annual basis? c. What is the maximum monthly charge FGC should pay for the lockbox system?

Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain’s 2016 sales (all on credit) were $121,000; its cost of goods sold is 80% of sales; and it earned a net profit of 2%, or$2,420. It turned over its inventory 7 times during the year, and its DSO was 37 days. The firm had fixed assets totaling $42,000. Chastain’s payables deferral period is 35 days. a. Calculate Chastain’s cash conversion cycle. b. Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. c. Suppose Chastain’s managers believe that the inventory turnover can be raised to 9.9 times. What would Chastain’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9.9 for 2016?

A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $\$ 2$ million sinking fund payment on its debt. The most recent industry average ratios and the firm's financial statements are as follows:

$\hspace{30mm}\textbf{Industry Average Ratios}$

$$\small{ \begin{aligned} &\begin{array}{lcll} \text { Current ratio } & 3 \times & \text { Fixed assets tumover } & 6 \times \\ \text { Debt-to-capital ratio } & 20 \% & \text { Total assets tumover } & 3 \times \\ \text { Times interest earned } & 7 \times & \text { Profit margin } & 3 \% \\ \text { EBITDA coverage } & 9 \times & \text { Return on total assets } & 9 \% \\ \text { Inventory turnover } & 10 \times & \text { Return on common equity } & 12.86 \% \\ \text { Days sales outstanding }{ }^a & 24 \text { days } & \text { Return on invested capital } & 11.50 \% \end{array}\\ &{ }^a \text { Calculation is based on a 365-day year. } \end{aligned}}$$

$$\textbf{Balance Sheet as of December 31, 2015 (Millions of Dollars)}$$

$$\small{ \begin{array}{lrlr} \text{Cash and equivalents}& \$ 78 &\text{Accounts payable} &\$ 45\\ \text{Accounts receivable}& 66 &\text{Other current liabiities} &11\\ \text{Inventories}& 159& \text{Notes payable}& 29\\ \text{Total current assets} &\$303 &\text{Total current liabilties} &\$ 85\\ &&\text{Long-term debt}& 50\\ &&\text{Total libilities} &\$135\\ \text{Gross fixed assets} &225& \text{Common stock} &114\\ \text{Less depreciation} &78& \text{Retained earnings}& 201\\ \text{Net fixed assets} &\$147& \text{Total stockholders’ equity}& \$315\\ \text{Total assets} &\$450 &\text{Total liabilties and equity}& \$450 \\ \end{array}}$$

$\textbf{Income Statement for Year Ended December 31, 2015 (Millions of Dollars)}$

$$\small{ \begin{array}{lr} \text { Net sales } & \$ 795.0 \\ \text { Cost of goods sold } & 660.0 \\ \quad \text { Gross profit } & \$135.0 \\ \text { Selling expenses } & 73.5 \\ \text { EBITDA } & \$ 61.5 \\ \text { Depreciation expense } & 12.0 \\ \quad \text { Earnings before interest and taxes (EBIT) } & \$ 49.5 \\ \text { Interest expense } & 4.5 \\ \text { Earnings before taxes (EBT) } & \$ 45.0 \\ \text { Taxes (40\%) } &18.0 \\ \text { Net income } &\$27.0 \end{array}}$$

a. Calculate the ratios you think would be useful in this analysis.

b. Construct a DuPont equation, and compare the company's ratios to the industry average ratios.

c. Do the balance sheet accounts or the income statement figures seem to be primarily responsible for the low profits?

d. Which specific accounts seem to be most out of line relative to other firms in the industry?

e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?

For the following crosses, determine as accurately as possible the genotypes of each parent, the parent in whom nondisjunction occurs, and whether nondisjunction takes place in the first or second meiotic division. Both color blindness and hemophilia, a blood-clotting disorder, are X-linked recessive traits. In each case, assume the parents have normal karyotypes.

a. A man and a woman who each have wild-type phenotypes have a son with Klinefelter syndrome (XXY) who has hemophilia.

b. A man who is color blind and a woman who is wild type have a son with Jacob syndrome (XYY) who has hemophilia.

c. A color-blind man and a woman who is wild type have a daughter with Turner syndrome (XO) who has normal color vision and blood clotting.

d. A man who is color blind and has hemophilia and a woman who is wild type have a daughter with triple X syndrome (XXX) who has hemophilia and normal color vision.

The table shows that U.S. adults dependent on tobacco have a greater probability of suffering from some ailments than the general adult population. When making two or more selections from populations with large numbers, such as the U.S. adult population or the population dependent on tobacco, we assume that each selection is independent of every other selection. Assume that the selections are independent events.

$$\begin{array}{c} \text{Probability that U.S adults suffer from various ailments}\\ \begin{array}{|l|c|c|c|c|} \hline & \text{Depression} & \text{Frequent Hangovers} & \text{Anxiety/Panic Disorder} & \text{Severe Pain}\\ \hline \text{Tobacco-Dependent Population} & 0.28 & 0.20 & 0.19 & 0.14\\ \hline \text{General Population} & 0.12 & 0.10 & 0.08 & 0.07\\ \hline \end{array} \end{array}$$

If three adults are randomly selected from the population of cigarette smokers, what is the probability that they all suffer from frequent hangovers?

Electric power consumption is measured in kilowatt-hours (kWh). The local utility company offers an interrupt program whereby commercial customers that participate receive favorable rates but must agree to cut back consumption if the utility requests them to do so. Timko Products has agreed to cut back consumption from noon to 8:00 P.M. on Thursday. To determine Timko’s savings, the utility must estimate Timko’s normal power usage for this period of time. Data on Timko’s electric power consumption for the previous 72 hours are shown below.

$$\begin{matrix} \text{Time Period} & \text{Monday} & \text{Tuesday} & \text{Wednesday} & \text{Thursday}\\ \hline \text{12–4 A.M.} & \text{—} & \text{19,281} & \text{31,209} & \text{27,330}\\ \text{4–8 A.M.} & \text{—} & \text{33,195} & \text{37,014} & \text{32,715}\\ \text{8–12 noon} & \text{—} & \text{99,516} & \text{119,968} & \text{152,465}\\ \text{12–4 P.M.} & \text{124,299} & \text{123,666} & \text{156,033}\\ \text{4–8 P.M.} & \text{113,545} & \text{111,717} & \text{128,889}\\ \text{8–12 midnight} & \text{41,300} & \text{48,112} & \text{73,923}\\ \end{matrix}$$

a. Construct a time series plot. What type of pattern exists in the data? b. Use the following dummy variables to develop an estimated regression equation to account for any seasonal effects in the data. Time1 = 1 for time period 12–4 A.M.; 0 otherwise Time2 = 1 for time period 4–8 A.M; 0 otherwise Time3 = 1 for time period 8–12 noon; 0 otherwise Time4 = 1 for time period 12–4 P.M; 0 otherwise Time5 = 1 for time period 4–8 P.M; 0 otherwise. c. Use the estimated regression equation developed in part (b) to estimate Timko’s normal usage over the period of interrupted service. d. Let Period = 1 to refer to the observation for Monday in the time period 12–4 P.M.; Period = 2 to refer to the observation for Monday in the time period 4–8 P.M; . . . and Period =18 to refer to the observation for Thursday in the time period 8–12 noon. Using the dummy variables defined in part (b) and Period, develop an estimated regression equation to account for seasonal effects and any linear trend in the time series. e. Using the estimated regression equation developed in part (d), estimate Timko’s normal usage over the period of interrupted service.

You are working the afternoon shift in an inpatient psychiatric unit. The patients are in the day room watching a movie when suddenly someone starts yelling. You and other staff rush to the day room to find J.J., a $55$-year-old male patient, crouched in the corner behind a chair, yelling at the other patients, "Get down. Get down quick."You and the other staff are able to calm J.J. and the other patients and take J.J. to his room. He apologizes for his outburst and explains to you that the movie brought back memories of the Gulf War. He had forgotten where he was and thought he was in combat again. He describes to you in detail the memory he had of being ambushed by the enemy and watching several of his comrades be killed. You remember hearing in report that J.J. is a Gulf War veteran.

What is the difference between PTSD and acute stress disorder, according to the DSM-IV-TR?

A variety of neural and muscular disorders are associated with expansions of trinucleotide repeat sequences. The table below lists several disorders, the repeat motifs, their locations, the normal number of repeats, and the number of repeats in the full mutations.

$$\begin{array}{lllll}\text { Disorder } & \text { Repeat } & \text { Location } & \text { Normal Number } & \text { Full Mutation } \\ \text { Fragile } X & \text { CCG } & 5^{\prime} \text { untranslated region } & 6-230 & >230 \\ \text { Huntington } & \text { CAG } & \text { Exon } & 6-35 & 36-120 \\ \text { Myotonic dystrophy } & \text { CTG } & 3^{\prime} \text { untranslated region } & 5-37 & 37-1500 \\ \text { Oculopharyngeal muscular dystrophy } & \text { GCG } & \text { Exon } & 6 & 8-13 \\ \text { Friedreich ataxia } & \text { AAG } & \text { Intron } & 20 & 200-900\end{array}$$

(a) Most disorders attributable to trinucleotide repeats result from the expansion of the repeats. Two mechanisms are often proposed to explain repeat expansion:
(1) unequal synapsis and crossing over
(2) errors in DNA replication where single-stranded, base-paired loops have formed that conflict with linear replication. Present a simple sketch of each mechanism.
(b) Notice that some of the repeats occur in areas of the gene that are not translated. How can a mutation occur if the alteration is not reflected in an altered amino acid sequence?
(c) In the two cases where the repeat expansions occur in exons, the extent of expansion is considerably less than when the expansion occurs outside exons. Present an explanation for this observation.

Using Contractions Correctly. Each sentence contains a word group that can be written as a contraction. Write each contraction in the space at the right. Carol is singing in the choir.

Air pollution control specialists in southern California monitor the amount of ozone, carbon dioxide, and nitrogen dioxide in the air on an hourly basis. The hourly time series data exhibit seasonality, with the levels of pollutants showing patterns that vary over the hours in the day. On July 15, 16, and 17, the following levels of nitrogen dioxide were observed for the 12 hours from 6:00 a.m. to 6:00 p.m.:

$$\begin{array}{lllllllllllll} \text { July 15 } & 25 & 28 & 35 & 50 & 60 & 60 & 40 & 35 & 30 & 25 & 25 & 20 \\ \text { July 16 } & 28 & 30 & 35 & 48 & 60 & 65 & 50 & 40 & 35 & 25 & 20 & 20 \\ \text { July 17 } & 35 & 42 & 45 & 70 & 72 & 75 & 60 & 45 & 40 & 25 & 25 & 25 \end{array}$$

Let t = 1 to refer to the observation in hour 1 on July 15; t = 2 to refer to the observation in hour 2 of July 15; and t = 36 to refer to the observation in hour 12 of July 17. Using the dummy variables defined in the previous part and ts, develop an equation to account for seasonal effects and any linear trend in the time series.

Mathematical models of ground temperature variation usually involve Fourier series or other sophisticated methods. However, the elementary model $u(x, t)=T_{0}+A_{0} e^{-a x} \cos \left(\frac{\pi}{6} t-a x\right)$ has been developed for temperature at a given location at a variable time t (in months) and a variable depth x (in centimeters) beneath Earth’s surface, is the annual average surface temperature, and $A_0$ is the amplitude of the seasonal surface temperature variation. Assume that $T_{0}=16^{\circ} \mathrm{C}$ and $A_{0}=11^{\circ} \mathrm{C}$ at a certain location. Also assume that a=0.00706 in cgs (centimeters-gram-second) units. a. At what minimum depth x is the amplitude of u(x, t) at most $1^{\circ} \mathrm{C} ?$ b.Suppose we wish to construct a cellar to keep wine at a temperature between $14^{\circ} \mathrm{C}$ and $18^{\circ} \mathrm{C}$. What minimum depth will accomplish this? c. At what minimum depth x does the ground temperature model predict that it will be winter when it is summer at the surface, and vice versa? That is, when will the phase shift correspond to year? d.Show that the ground temperature model satisfies the heat equation $\frac{\partial u}{\partial t}=k \frac{\partial^{2} u}{\partial x^{2}}$, where k is a constant.