Question 1

Costs of the firm that fall with increased levels of investment in its current assets are called _____ costs.

Accepted Answer

A)   carrying
B)   shortage
C)   debt
D)   equity
E)   payablesF) B) and D)
G) A) and D)

Question 2

Blue Moon Corporation's Balance Sheet and Income Statement as shown below:   Blue Moon Corporation's days' sales in receivable for 2011 is (use average accounts receivable)  ______.

Accepted Answer

A)   10.56 days
B)   12.36 days
C)   23.66 days
D)   17.10 days
E)   126.74 daysF) D) and E)
G) B) and D)

Question 3

Blue Moon Corporation's Balance Sheet and Income Statement as shown below:   Blue Moon Corporation's accounts payable turnover for 2011 is (use average payables)  ______.

Accepted Answer

A)   7.75
B)   7.96
C)   8.94
D)   9.02
E)   10.39F) B) and E)
G) A) and D)

Question 4

Which one of the following will increase the cash cycle?

Accepted Answer

A)   Improving the cash discounts given to customers who pay their accounts early
B)   Having a larger percentage of customers paying with cash instead of credit
C)   Buying less raw materials to have on hand
D)   Paying your suppliers earlier to receive the discount they offer
E)   Ordering raw materials inventory only when you need itF) C) and D)
G) A) and D)

Question 5

A firm has sales of $720,000. The cost of goods sold is equal to 70% of sales. The firm has an average inventory of $6,500. How many days on average does it take the firm to sell its inventory?

Accepted Answer

A)   3.30 days
B)   4.71 days
C)   67.29 days
D)   77.54 days
E)   110.77 daysF) D) and E)
G) None of the above

Question 6

The inventory turnover for the Lambkin Company was 8 times and its days' sales in receivables was 55. The average payables deferral period (or turnover)  was 7.5. What is the cash cycle for Lambkin given a 365-day year?

Accepted Answer

A)   51.96 days
B)   58.04 days
C)   115.00 days
D)   149.29 days
E)   164.37 daysF) A) and E)
G) C) and D)

Question 7

Smith and Johnson have expected sales of $380,$340,$430 and $480 for the months of January through April,respectively. The accounts receivable period is 15 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Accepted Answer

A)   $340
B)   $360
C)   $385
D)   $430
E)   $455F) A) and B)
G) A) and E)

Question 8

The length of time between the acquisition of inventory and its sale is called the:

Accepted Answer

A)   operating cycle.
B)   inventory period.
C)   accounts receivable period.
D)   accounts payable period.
E)   cash cyclE.F) C) and D)
G) C) and E)

Question 9

Orio,Inc. has a beginning receivables balance on January 1st of $560. Sales for January through April are $620,$680,$570 and $550,respectively. The accounts receivable period is 30 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Accepted Answer

A)   $550
B)   $570
C)   $620
D)   $625
E)   $680F) A) and E)
G) B) and E)

Question 10

Your firm factors its accounts receivable immediately at a 3% discount. The average collection period is 41.95 days. Assume that all accounts are collected in full. What is the effective annual interest rate on this arrangement?

Accepted Answer

A)   27.9%
B)   30.3%
C)   31.7%
D)   32.9%
E)   34.3%F) C) and D)
G) B) and E)

Question 11

Which one of the following will decrease the net working capital of a firm? Assume that the current ratio is greater than 1.0.

Accepted Answer

A)   Selling inventory at a profit
B)   Collecting an accounts receivable
C)   Paying a payment on a long-term debt
D)   Selling a fixed asset for book value
E)   Paying an accounts payableF) B) and C)
G) C) and D)

Question 12

The manager responsible for the accounting information concerning cash flows is the:

Accepted Answer

A)   controller.
B)   payables manager.
C)   credit manager.
D)   purchasing manager.
E)   production manager.F) C) and E)
G) C) and D)

Question 13

Which one of the following will not affect the operating cycle?

Accepted Answer

A)   decreasing the payables turnover from 7 times to 6 times
B)   increasing the days sales in receivables
C)   decreasing the inventory turnover rate
D)   increasing the average receivables balance
E)   decreasing the credit repayment times for the firm's customersF) All of the above
G) A) and E)

Question 14

A short-term loan where the lender holds the borrower's receivables as security is called:

Accepted Answer

A)   a compensating balance.
B)   assigned receivables financing.
C)   a letter of credit.
D)   factored receivables financing.
E)   a bond.F) A) and C)
G) A) and D)

Question 15

At the beginning of the year,you have an outstanding short-term loan of $10 which was used to cover your cash needs for the previous year. During the current year,you expect to pay $2 interest and have an annual net cash inflow of -$10 (negative) ,excluding the interest payment. What is your anticipated loan balance at year end?

Accepted Answer

A)   $0
B)   $2
C)   $12
D)   $18
E)   $22F) B) and C)
G) A) and B)

Question 16

Restrictive short-term financial policies regarding current asset management include three basic actions. List and briefly describe each action.

Accepted Answer

The three actions are: Keep ca...

Question 17

Which one of the following statements concerning the cash cycle is correct?

Accepted Answer

A)   The cash cycle is equal to the operating cycle minus the inventory period.
B)   A negative cash cycle is actually preferable to a positive cash cycle.
C)   Granting credit to slower paying customers tends to decrease the cash cycle.
D)   The cash cycle plus the accounts receivable period is equal to the operating cycle.
E)   The most desirable cash cycle is the one that equals zero days.F) A) and C)
G) B) and E)

Question 18

Which one of the following will increase net working capital? Assume that the current ratio is greater than 1.0.

Accepted Answer

A)   using cash to pay an accounts payable
B)   using cash to pay a long-term debt
C)   selling inventory at cost
D)   collecting an accounts receivable
E)   using a long-term loan to buy inventoryF) C) and D)
G) A) and C)

Question 19

Blue Moon Corporation's Balance Sheet and Income Statement as shown below:   The inventory turnover ratio for 2011 for Blue Moon Corporation is (use average inventory)  _______.

Accepted Answer

A)   2.96
B)   3.06
C)   3.17
D)   5.87
E)   6.05F) C) and D)
G) A) and B)

Question 20

The Babco Co. has a $200,000 line of credit with an 8% interest rate and a 10% compensating balance requirement which is based on the total amount borrowed. What is the effective interest rate if the firm uses this source of funding to purchase a $117,000 piece of equipment? The company plans on repaying the loan in a lump sum at the end of one year.

Accepted Answer

A)   7.20%
B)   7.27%
C)   8.08%
D)   8.80%
E)   8.89%F) D) and E)
G) A) and D)

Exam 26: Short-Term Finance and Planning

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: The inventory turnover ratio for 2011 for Blue Moon Corporation is (use average inventory) _______.

Correct Answer
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Restrictive short-term financial policies regarding current asset management include three basic actions. List and briefly describe each action.

Correct Answer
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The three actions are: Keep ca...
View Answer

The length of time between the acquisition of inventory and its sale is called the:

Correct Answer
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Which one of the following will decrease the net working capital of a firm? Assume that the current ratio is greater than 1.0.

Correct Answer
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Correct Answer
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Smith and Johnson have expected sales of $380,$340,$430 and $480 for the months of January through April,respectively. The accounts receivable period is 15 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Correct Answer
verified

Costs of the firm that fall with increased levels of investment in its current assets are called _____ costs.

Correct Answer
verified

Which one of the following will increase net working capital? Assume that the current ratio is greater than 1.0.

Correct Answer
verified

The manager responsible for the accounting information concerning cash flows is the:

Correct Answer
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Which one of the following will increase the cash cycle?

Correct Answer
verified

The inventory turnover for the Lambkin Company was 8 times and its days' sales in receivables was 55. The average payables deferral period (or turnover) was 7.5. What is the cash cycle for Lambkin given a 365-day year?

Correct Answer
verified

A short-term loan where the lender holds the borrower's receivables as security is called:

Correct Answer
verified

Orio,Inc. has a beginning receivables balance on January 1^st of $560. Sales for January through April are $620,$680,$570 and $550,respectively. The accounts receivable period is 30 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Correct Answer
verified

Your firm factors its accounts receivable immediately at a 3% discount. The average collection period is 41.95 days. Assume that all accounts are collected in full. What is the effective annual interest rate on this arrangement?

Correct Answer
verified

Correct Answer
verified

Which one of the following statements concerning the cash cycle is correct?

Correct Answer
verified

A firm has sales of $720,000. The cost of goods sold is equal to 70% of sales. The firm has an average inventory of $6,500. How many days on average does it take the firm to sell its inventory?

Correct Answer
verified

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: Blue Moon Corporation's days' sales in receivable for 2011 is (use average accounts receivable) ______.

Correct Answer
verified

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: Blue Moon Corporation's accounts payable turnover for 2011 is (use average payables) ______.

Correct Answer
verified

Which one of the following will not affect the operating cycle?

Correct Answer
verified

Exam 26: Short-Term Finance and Planning

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: The inventory turnover ratio for 2011 for Blue Moon Corporation is (use average inventory) _______.

Correct AnswerverifiedShow Answer

Restrictive short-term financial policies regarding current asset management include three basic actions. List and briefly describe each action.

Correct AnswerverifiedThe three actions are: Keep ca...View AnswerShow Answer

The length of time between the acquisition of inventory and its sale is called the:

Correct AnswerverifiedShow Answer

Which one of the following will decrease the net working capital of a firm? Assume that the current ratio is greater than 1.0.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Smith and Johnson have expected sales of $380,$340,$430 and $480 for the months of January through April,respectively. The accounts receivable period is 15 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Correct AnswerverifiedShow Answer

Costs of the firm that fall with increased levels of investment in its current assets are called _____ costs.

Correct AnswerverifiedShow Answer

Which one of the following will increase net working capital? Assume that the current ratio is greater than 1.0.

Correct AnswerverifiedShow Answer

The manager responsible for the accounting information concerning cash flows is the:

Correct AnswerverifiedShow Answer

Which one of the following will increase the cash cycle?

Correct AnswerverifiedShow Answer

The inventory turnover for the Lambkin Company was 8 times and its days' sales in receivables was 55. The average payables deferral period (or turnover) was 7.5. What is the cash cycle for Lambkin given a 365-day year?

Correct AnswerverifiedShow Answer

A short-term loan where the lender holds the borrower's receivables as security is called:

Correct AnswerverifiedShow Answer

Orio,Inc. has a beginning receivables balance on January 1st of $560. Sales for January through April are $620,$680,$570 and $550,respectively. The accounts receivable period is 30 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Correct AnswerverifiedShow Answer

Your firm factors its accounts receivable immediately at a 3% discount. The average collection period is 41.95 days. Assume that all accounts are collected in full. What is the effective annual interest rate on this arrangement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following statements concerning the cash cycle is correct?

Correct AnswerverifiedShow Answer

A firm has sales of $720,000. The cost of goods sold is equal to 70% of sales. The firm has an average inventory of $6,500. How many days on average does it take the firm to sell its inventory?

Correct AnswerverifiedShow Answer

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: Blue Moon Corporation's days' sales in receivable for 2011 is (use average accounts receivable) ______.

Correct AnswerverifiedShow Answer

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: Blue Moon Corporation's accounts payable turnover for 2011 is (use average payables) ______.

Correct AnswerverifiedShow Answer

Which one of the following will not affect the operating cycle?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The three actions are: Keep ca...
View Answer

Correct Answer
verified

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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Correct Answer
verified

Orio,Inc. has a beginning receivables balance on January 1^st of $560. Sales for January through April are $620,$680,$570 and $550,respectively. The accounts receivable period is 30 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Correct Answer
verified

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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