Question 1

The accounts receivable period is the time that elapses between the _____ and the _____.

Accepted Answer

A)   purchase of inventory; payment to the supplier
B)   purchase of inventory; collection of the receivable
C)   sale of inventory; payment to supplier
D)   sale of inventory; collection of the receivable
E)   sale of inventory: billing to customerF) A) and B)
G) B) and E)

Question 2

The Supply Hut has the following estimated sales:  The accounts receivable period is 60 days. How much should the firm expect to collect in May?

Accepted Answer

A)   $18,600
B)   $19,900
C)   $21,200
D)   $21,450
E)   $24,300F) C) and E)
G) A) and D)

Question 3

Which one of the following will increase the operating cycle?

Accepted Answer

A)   Decreasing the accounts payable period
B)   Increasing the accounts payable turnover rate
C)   Increasing the cash cycle
D)   Decreasing the accounts receivable turnover rate
E)   Decreasing the inventory periodF) A) and C)
G) C) and E)

Question 4

Zeigler Marina has a line of credit with a local bank that permits it to borrow up to $1.3 million at any time. The interest rate is 0.57 percent per month. The bank charges compound interest and also requires that 5 percent of the amount borrowed be deposited into a noninterest-bearing account. What is the effective annual interest rate on this loan?

Accepted Answer

A)   6.68 percent
B)   7.43 percent
C)   7.74 percent
D)   7.80 percent
E)   7.91 percentF) D) and E)
G) A) and B)

Question 5

Webster's currently has an inventory turnover of 15.7, a payables turnover of 9.6, and a receivables turnover of 8.4. How many days are in the cash cycle?

Accepted Answer

A)   28.68 days
B)   33.70 days
C)   56.51 days
D)   84.39 days
E)   104.72 daysF) A) and B)
G) A) and C)

Question 6

To ensure an unsecured line of credit is used solely for short-term purposes, the loan arrangement frequently includes which one of the following?

Accepted Answer

A)   Cleanup period
B)   Grace period
C)   Revolver
D)   Factoring arrangement
E)   Lien on the borrower's inventoryF) B) and E)
G) A) and E)

Question 7

Jackson's, Inc. currently has an operating cycle of 154 days and a cash cycle of 38 days. The firm is implementing some changes which will reduce the inventory period by 16 days and decrease the receivables period by 4 days on average. The accounts payable period will be decreased by 3 days. How many days will be in the new cash cycle once all of these changes become effective?

Accepted Answer

A)   15 days
B)   18 days
C)   21 days
D)   55 days
E)   61 daysF) All of the above
G) A) and D)

Question 8

The accounts receivable turnover rate for Kitlinger's Men's Wear has gone from an average of 10.6 times to 10.1 times per year. How has this change affected the firm's accounts receivable period?

Accepted Answer

A)   Decrease of 1.71 days
B)   Increase of 1.71 days
C)   Decrease of 2.28 days
D)   Increase of 2.28 days
E)   Increase of 2.97 daysF) B) and C)
G) A) and B)

Question 9

Pennington's has annual sales of $1.46 million. The cost of goods sold is equal to 78 percent of sales. The firm has an average accounts receivable balance of $148,900 and an average accounts payable balance of $163,500. How many days on average does it take the firm to pay its suppliers?

Accepted Answer

A)   40.88 days
B)   47.72 days
C)   49.81 days
D)   52.40 days
E)   56.67 daysF) A) and B)
G) A) and C)

Question 10

Kurt's Enterprises has a receivables turnover rate of 11.8, a payables turnover rate of 12.4, and an inventory turnover rate of 15.6. What is the length of the firm's operating cycle?

Accepted Answer

A)   24.89 days
B)   39.80 days
C)   54.33 days
D)   72.56 days
E)   83.77 daysF) A) and B)
G) A) and C)

Question 11

The Corner Store is a small-sized, general store which stocks a minimal level of basic supplies and offers gasoline to a rural community. Which one of the following types of credit is probably best-suited for financing this store's inventory?

Accepted Answer

A)   Trust receipt financing
B)   Receivables factoring
C)   Field warehousing
D)   Blanket inventory lien
E)   Receivables assignmentF) B) and D)
G) A) and B)

Question 12

Harter's Meats has an average collection period of 36 days and factors all of its receivables immediately at a 1.2 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?

Accepted Answer

A)   12.88 percent
B)   12.94 percent
C)   12.97 percent
D)   13.02 percent
E)   13.07 percentF) A) and C)
G) A) and D)

Question 13

Erin's purchases from suppliers in a quarter are equal to 67 percent of the next quarter's forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 30 percent of sales, and interest and dividends are $90 per quarter. No capital expenditures are planned. Projected quarterly sales are:  Sales for the first quarter of the following year are projected at $1,510. What is the amount of the firm's total cash outlay for the third quarter?

Accepted Answer

A)   $1,990
B)   $1,420
C)   $1,480
D)   $1,530
E)   $1,550F) None of the above
G) A) and B)

Question 14

The operating cycle is equal to which one of the following?

Accepted Answer

A)   Inventory period plus the accounts payable period
B)   Accounts receivable period plus the cash cycle
C)   Inventory period minus the accounts payable period plus the accounts receivable period
D)   Accounts receivable period plus the inventory period
E)   Inventory period plus the cash cycleF) A) and D)
G) B) and E)

Question 15

Which one of the following is most apt to decrease the accounts receivable period?

Accepted Answer

A)   Increasing the time granted to customers to pay for purchases
B)   Shortening the cash cycle
C)   Increasing the discount for cash payment
D)   Selling inventory slower
E)   Paying suppliers fasterF) B) and C)
G) D) and E)

Question 16

The local toy store has to restock a popular video game every 4 days as it completely sells out in that period of time. What is the inventory turnover rate for this game?

Accepted Answer

A)   4.00 times
B)   4.25 times
C)   57.14 times
D)   90.00 times
E)   91.25 timesF) A) and D)
G) B) and E)

Question 17

The Road Kill Restaurant has the following current account values for the year. These accounts represent a net _____ of cash for the year in the amount of _____.

Accepted Answer

A)   source; $3,100
B)   source; $4,700
C)   use; $3,100
D)   use; $3,800
E)   use; $4,700F) D) and E)
G) A) and E)

Question 18

Black Water Mills is operating at its optimal point. Which one of the following conditions exists given this firm's operating status?

Accepted Answer

A)   Carrying costs exceed shortage costs
B)   Carrying costs are equal to zero
C)   Both carrying costs and shortage costs are at their minimum levels
D)   Shortage costs are equal to zero
E)   Shortage costs equal carrying costsF) B) and E)
G) A) and B)

Question 19

Which of the following are inversely related to increases in a firm's current assets? I. re-order costs
II)  shortage costs
III)  restocking costs
IV)  carrying costs

Accepted Answer

A)   I and III only
B)   II and IV only
C)   I, II, and III only
D)   II, III, and IV only
E)   I, III, and IV onlyF) D) and E)
G) A) and E)

Question 20

Here are some important figures from the budget of Wexter Enterprises for the second quarter of 2010:  The company predicts that 2 percent of its credit sales will never be collected, 45 percent of its sales will be collected in the month of sale, and the remaining 53 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2010, credit sales were $387,000 and credit purchases were $279,500. What is the ending cash balance for April if the beginning cash balance was $97,500?

Accepted Answer

A)   $87,410
B)   $90,060
C)   $92,800
D)   $94,440
E)   $97,230F) B) and E)
G) A) and D)

Exam 16: Short-Term Financial Planning

The accounts receivable period is the time that elapses between the _ and the _.

Correct Answer
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Black Water Mills is operating at its optimal point. Which one of the following conditions exists given this firm's operating status?

Correct Answer
verified

The local toy store has to restock a popular video game every 4 days as it completely sells out in that period of time. What is the inventory turnover rate for this game?

Correct Answer
verified

Which one of the following is most apt to decrease the accounts receivable period?

Correct Answer
verified

The Supply Hut has the following estimated sales: The accounts receivable period is 60 days. How much should the firm expect to collect in May?

Correct Answer
verified

Correct Answer
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Pennington's has annual sales of $1.46 million. The cost of goods sold is equal to 78 percent of sales. The firm has an average accounts receivable balance of $148,900 and an average accounts payable balance of $163,500. How many days on average does it take the firm to pay its suppliers?

Correct Answer
verified

The accounts receivable turnover rate for Kitlinger's Men's Wear has gone from an average of 10.6 times to 10.1 times per year. How has this change affected the firm's accounts receivable period?

Correct Answer
verified

Harter's Meats has an average collection period of 36 days and factors all of its receivables immediately at a 1.2 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?

Correct Answer
verified

Kurt's Enterprises has a receivables turnover rate of 11.8, a payables turnover rate of 12.4, and an inventory turnover rate of 15.6. What is the length of the firm's operating cycle?

Correct Answer
verified

The Road Kill Restaurant has the following current account values for the year. These accounts represent a net _ of cash for the year in the amount of _.

Correct Answer
verified

Which of the following are inversely related to increases in a firm's current assets? I. re-order costs II) shortage costs III) restocking costs IV) carrying costs

Correct Answer
verified

Which one of the following will increase the operating cycle?

Correct Answer
verified

The operating cycle is equal to which one of the following?

Correct Answer
verified

Correct Answer
verified

The Corner Store is a small-sized, general store which stocks a minimal level of basic supplies and offers gasoline to a rural community. Which one of the following types of credit is probably best-suited for financing this store's inventory?

Correct Answer
verified

To ensure an unsecured line of credit is used solely for short-term purposes, the loan arrangement frequently includes which one of the following?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Webster's currently has an inventory turnover of 15.7, a payables turnover of 9.6, and a receivables turnover of 8.4. How many days are in the cash cycle?

Correct Answer
verified

Exam 16: Short-Term Financial Planning

The accounts receivable period is the time that elapses between the _____ and the _____.

Correct AnswerverifiedShow Answer

Black Water Mills is operating at its optimal point. Which one of the following conditions exists given this firm's operating status?

Correct AnswerverifiedShow Answer

The local toy store has to restock a popular video game every 4 days as it completely sells out in that period of time. What is the inventory turnover rate for this game?

Correct AnswerverifiedShow Answer

Which one of the following is most apt to decrease the accounts receivable period?

Correct AnswerverifiedShow Answer

The Supply Hut has the following estimated sales: The accounts receivable period is 60 days. How much should the firm expect to collect in May?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Pennington's has annual sales of $1.46 million. The cost of goods sold is equal to 78 percent of sales. The firm has an average accounts receivable balance of $148,900 and an average accounts payable balance of $163,500. How many days on average does it take the firm to pay its suppliers?

Correct AnswerverifiedShow Answer

The accounts receivable turnover rate for Kitlinger's Men's Wear has gone from an average of 10.6 times to 10.1 times per year. How has this change affected the firm's accounts receivable period?

Correct AnswerverifiedShow Answer

Harter's Meats has an average collection period of 36 days and factors all of its receivables immediately at a 1.2 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?

Correct AnswerverifiedShow Answer

Kurt's Enterprises has a receivables turnover rate of 11.8, a payables turnover rate of 12.4, and an inventory turnover rate of 15.6. What is the length of the firm's operating cycle?

Correct AnswerverifiedShow Answer

The Road Kill Restaurant has the following current account values for the year. These accounts represent a net _____ of cash for the year in the amount of _____.

Correct AnswerverifiedShow Answer

Which of the following are inversely related to increases in a firm's current assets? I. re-order costs II) shortage costs III) restocking costs IV) carrying costs

Correct AnswerverifiedShow Answer

Which one of the following will increase the operating cycle?

Correct AnswerverifiedShow Answer

The operating cycle is equal to which one of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Corner Store is a small-sized, general store which stocks a minimal level of basic supplies and offers gasoline to a rural community. Which one of the following types of credit is probably best-suited for financing this store's inventory?

Correct AnswerverifiedShow Answer

To ensure an unsecured line of credit is used solely for short-term purposes, the loan arrangement frequently includes which one of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Webster's currently has an inventory turnover of 15.7, a payables turnover of 9.6, and a receivables turnover of 8.4. How many days are in the cash cycle?

Correct AnswerverifiedShow Answer

The accounts receivable period is the time that elapses between the _ and the _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The Road Kill Restaurant has the following current account values for the year. These accounts represent a net _ of cash for the year in the amount of _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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