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Exam 18: Short-Term Finance Amcq Planning

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Question 21

Multiple Choice

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A type of short-term loan where the borrower sells its accounts receivables to the lender at a discount to face value is called

A) a compensating balance.
B) an assignment.
C) a letter of credit.
D) factoring.
E) a bond.

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Question 22

Multiple Choice

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HM Industries has a beginning receivables balance on January 1^st of $484.Sales for January through April are $420,$364,$390,and $433,respectively.The accounts receivable period is 60 days.How much did the firm collect in the month of April? Assume a 360-day year.

A) $420
B) $364
C) $377
D) $390
E) $392

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Question 23

Multiple Choice

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Shortage costs include

Which one of the following actions will tend to increase the accounts receivable period?

A manufacturing firm has a 90-day collection period.The firm produces seasonal merchandise and thus has the least sales during the first quarter of a year and the highest level of sales during the third quarter of a year.The firm maintains a relatively steady level of production which,means that its cash disbursements are fairly equal in all quarters.Assume all other disbursements are also equal throughout the year.Assume a 360-day year.The firm is most apt to face a cash-out situation in

Dwyer Metals has an inventory turnover of 16 and an accounts receivable turnover of 10.The accounts payable period is 51 days.What is the length of the operating cycle?

Dewey's expects sales of $780,$830,$870,and $790 for the months of April through July,respectively.The firm collects 31 percent of sales in the month of sale,63 percent in the month following the month of sale,and 5 percent in the second month following the month of sale.The remaining 1 percent of sales is never collected.How much money does the firm expect to collect in the month of June?

Which one of the following will increase the cash cycle?

Which one of the following will increase net working capital? Assume the current ratio is positive.

Super Mart has sales of $542,300.The cost of goods sold is equal to 59 percent of sales.The beginning accounts receivable balance is $86,534,and the ending accounts receivable balance is $84,209.How long on average does it take the firm to collect its receivables?

Which one of the following statements is correct?

A firm has an inventory turnover rate of 15.2,a receivables turnover rate of 16.8,and a payables turnover rate of 12.7.How long is the operating cycle?

Duke's Auto Parts has a beginning receivables balance on January 1^st of $398.Quarterly sales for the year are $427,$502,$479,and $525,starting with the first quarter.The accounts receivable period is 60 days.How much did the firm collect in the second quarter? Assume a 360-day year.

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

Which one of these managers is most apt to determine which supplier should be used as the source of a production material?

Candy Corner has an inventory turnover rate of 14.6,an accounts payable period of 43.7 days,and an accounts receivable period of 32.4 days.What is the length of the cash cycle?

Which one of the following will decrease the operating cycle?

Your firm collects 20 percent of sales in the month of sale,65 percent of sales in the month following the month of sale,and 13 percent of sales in the second month following the month of sale.The remainder of the sales are uncollectible.Given this,you will collect ________ sales during the month of May.

ABC historically acquired products that were held in inventory until they could be sold to a customer.The firm is now changing its policy and will only acquire a product when it receives an actual order from a customer.All else equal,this change will

A supplier offers you credit terms of 1/5,net 20.What is the cost of forgoing the discount on a purchase of $1,250? Assume a 365-day year.