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Exam 26: Short-Term Finance and Planning

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Question 31

Multiple Choice

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Your firm has a net cash inflow for the quarter of £60.The beginning cash balance is £35.Company policy is to maintain a minimum cash balance of £15 and borrow only the amount that is necessary To maintain that balance.How much does your firm need to borrow or how much can it repay on its Loans to have a zero cumulative surplus?

A) borrow £40
B) borrow £10
C) repay £10
D) repay £40
E) repay £80

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Question 32

Multiple Choice

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True Blue Stores had a beginning trade payables balance of £56,900 and an ending trade payables balance of £62,800.Sales for the period were £670,000 and costs of goods sold were £418,000. What is the payables turnover rate?

A) 6.98 times.
B) 7.35 times.
C) 8.13 times.
D) 11.19 times.
E) 11.78 times.

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Question 33

Multiple Choice

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Which one of the following will increase the cash cycle?

A type of short-term loan where the borrower sells its receivables to the lender up-front, but at a discount to face value, is called:

Dokos has a beginning receivables balance on January 1st of £560.Sales for January through to April are £620, £680, £570 and £550, respectively.The trade receivables period is 30 days.How Much did the firm collect in the month of March? Assume that a year has 360 days.

Stoney Brooke has sales of £890,000 and cost of goods sold of £640,000.The firm had a beginning inventory of £36,000 and an ending inventory of £46,000.What is the length of the Inventory period?

StarrKnight Corporation's Statement of financial position and Income Statement as shown below: StarrKnight Corporation's cash cycle for 2015 is:

Your firm has a net cash inflow for the quarter of -£30 (negative) .The beginning cash balance is £15. Company policy is to maintain a minimum cash balance of £5 and borrow only the amount that is Necessary to maintain that balance.How much does your firm need to borrow to have a zero Cumulative surplus?

The Jetson Co.has an £80,000 line of credit with a 12% interest rate and a 10% compensating balance requirement which is based on the total amount borrowed.What is the effective annual Interest rate if the firm needs £45,000 of cash for one year?

A use of cash can be determined by:

Flexible short-term financial policies tend to:

A firm has an inventory turnover rate of 16, a receivables turnover rate of 21 and a payables turnover rate of 11.How long is the operating cycle?

Baker Industries has a 45 day trade receivables period.The estimated quarterly sales for this year, starting with the first quarter, are £1,200, £1,400, £1,900 and £3,200, respectively.How much does The firm expect to collect in the third quarter? Assume that a year has 360 days.

A prearranged, short-term bank loan made on a formal or informal basis, and typically reviewed for renewal annually, is called a:

A _____ issued by a bank is a promise by that bank to make a loan if certain conditions are met.

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

Which one of the following is a source of cash?

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?

Net working capital is defined as:

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