Question 1

D's Hardware's monthly purchases are equal to 72 percent of the following month's sales.The accounts payable period for purchases is 45 days.All other expenses are paid when incurred.Assume each month has 30 days.The company has compiled the following information:  What is the projected amount of disbursements for the month of September?

Accepted Answer

A)  $16,910
B)  $19,708
C)  $19,490
D)  $17,356
E)  $20,311F) A) and B)
G) B) and D)

Question 2

The length of time a retailer owes its supplier for an inventory purchase is called the:

Accepted Answer

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

Question 3

Which statement is true?

Accepted Answer

A)  A decrease in the accounts receivable turnover rate decreases the cash cycle.
B)  Paying a supplier within the discount period rather than waiting until the end of the normal credit period will decrease the cash cycle.
C)  The number of days in the cash cycle can be positive, negative, or equal to zero.
D)  An increase in the inventory turnover rate must increase the cash cycle.
E)  The payables period must be shorter than the receivables period.F) A) and E)
G) B) and D)

Question 4

Which of the following tend to rise when a firm switches to a flexible financial policy from a restrictive financial policy?
I.Restocking costs
II.Price reductions to offset limited selection
III.Storage costs
IV.Current asset opportunity costs

Accepted Answer

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

Question 5

Brilliant J Company has estimated quarterly sales for next year, starting with Quarter 1, of $16,974, $18,696, $21,279, and $20,295.Purchases are equal to 60 percent of the following quarter's sales.What is the cash outlay for accounts payable for Quarter 3 if the firm has a 30-day accounts payable period? Assume each month has 30 days.

Accepted Answer

A)  $12,250.80
B)  $12,373.80
C)  $12,486.67
D)  $12,966.67
E)  $12,503.33F) A) and B)
G) B) and C)

Question 6

Wrecker Automotive has sales for the year of $356,450, cost of goods sold equal to 59 percent of sales, and an average inventory of $42,500.The profit margin is 6 percent and the tax rate is 21 percent.How many days on average does it take the firm to sell an inventory item?

Accepted Answer

A)  75.68 days
B)  81.46 days
C)  73.76 days
D)  78.74 days
E)  82.03 daysF) A) and B)
G) A) and C)

Question 7

The Happy Flapjack Diner increased its operating cycle from 72 days to 74 days while the cash cycle decreased by 3 days.How have these changes affected the accounts payable period?

Accepted Answer

A)  Decreased by 5 days
B)  Decreased by 4 days
C)  Decreased by 2 days
D)  Increased by 2 days
E)  Increased by 5 daysF) A) and D)
G) C) and D)

Question 8

Coolman Outdoor has estimated monthly sales for February through May of $12,480, $13,260, $13,910, and $14,820, respectively.If the accounts receivable period is 45 days, how much will be collected in May? Assume each month has 30 days.

Accepted Answer

A)  $12,800
B)  $12,870
C)  $14,365
D)  $13,585
E)  $12,850F) A) and D)
G) A) and C)

Question 9

Gaming Station has to restock a popular electronic game every five days as it completely sells out in that period of time.What is the inventory turnover rate for this game?

Accepted Answer

A)  115 times
B)  105 times
C)  99 times
D)  118 times
E)  73 timesF) All of the above
G) A) and B)

Question 10

Which industry is most apt to have the shortest operating cycle?

Accepted Answer

A)  Toy store
B)  Car manufacturer
C)  Local restaurant
D)  Furniture store
E)  Plastics manufacturerF) C) and D)
G) A) and B)

Question 11

Candy Supplies purchases are equal to 68 percent of the following quarter's sales.Assume each month has 30 days, the accounts receivable period is 30 days, and the accounts payable period is 45 days.The estimated quarterly sales for next year, starting with Quarter 1, are $38,900, $40,600, $58,900, and $69,200, respectively.How much will the firm pay its suppliers in the third quarter?

Accepted Answer

A)  $41,379
B)  $46,811
C)  $44,514
D)  $40,947
E)  $43,554F) A) and B)
G) B) and D)

Question 12

Which of these is the most indicative of a flexible short-term financial policy?

Accepted Answer

A)  High ratio of short-term debt to long-term debt
B)  Relatively small investment in current assets
C)  High ratio of current assets to sales
D)  Low level of net working capital
E)  Relatively low level of liquidityF) A) and E)
G) None of the above

Question 13

Which one of the following commences on the day inventory is purchased and ends on the day the payment for the sale of that inventory is collected? Assume all sales and purchases are on credit.

Accepted Answer

A)  Inventory period
B)  Accounts receivable period
C)  Accounts payable period
D)  Operating cycle
E)  Cash cycleF) A) and E)
G) A) and B)

Question 14

Which activity is most apt to reduce the inventory period for a grocery store?

Accepted Answer

A)  Replacing slow-moving items with faster-selling products
B)  Replacing fresh foods with canned goods
C)  Decreasing the amount of discounts offered to customers
D)  Increasing the amount of inventory on hand
E)  Decreasing the number of times the inventory turns over per yearF) A) and C)
G) A) and E)

Question 15

Robert's Cards and Gifts has estimated quarterly sales for next year, starting with Quarter 1, of $43,930, $47,495, $37,835, and $91,655.The accounts receivable period is 13 days.What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.

Accepted Answer

A)  $6,068.39
B)  $13,239.06
C)  $6,860.39
D)  $6,345.44
E)  $5,465.06F) C) and D)
G) A) and E)

Question 16

Which statement related to a cash budget is correct?

Accepted Answer

A)  Capital expenditures are treated as a cash inflow on a cash budget.
B)  The cumulative surplus is computed prior to adjusting for the minimum cash balance.
C)  A positive net cash inflow for a period indicates the cash disbursements exceed the cash collections for the period.
D)  Financially healthy firms can have a negative quarterly net cash inflow.
E)  Firms generally set the minimum cash balance at zero for planning purposes.F) A) and E)
G) A) and D)

Question 17

Pepito's has sales for the year of $166,569 and cost of goods sold of $94,600.The firm carries an average inventory of $21,100 and has an average accounts payable balance of $19,600.What is the inventory period?

Accepted Answer

A)  89.02 days
B)  81.41 days
C)  31.29 days
D)  60.20 days
E)  81.06 daysF) C) and E)
G) B) and E)

Question 18

Moore & Moore has just finished projecting its expected cash receipts and expenditures for next year.What is this projection called?

Accepted Answer

A)  Operating projection
B)  Receivables schedule
C)  Balance sheet
D)  Cash budget
E)  Compromise policyF) B) and E)
G) C) and E)

Question 19

Which characteristic applies to commercial paper?

Accepted Answer

A)  Maturities of 270 days or more
B)  Offerings registered with the SEC
C)  Interest rates higher than comparable bank loans
D)  Issued directly by large-sized firms
E)  Issued primarily by low-rated firmsF) A) and B)
G) A) and C)

Question 20

Which one of the following is a graphical representation of the operating and cash cycles?

Accepted Answer

A)  Operations line
B)  Production period
C)  Cash flow time line
D)  Inventory flow chart
E)  Customer service lineF) D) and E)
G) B) and C)

Exam 16: Short-Term Financial Planning

Coolman Outdoor has estimated monthly sales for February through May of $12,480, $13,260, $13,910, and $14,820, respectively.If the accounts receivable period is 45 days, how much will be collected in May? Assume each month has 30 days.

Correct Answer
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Gaming Station has to restock a popular electronic game every five days as it completely sells out in that period of time.What is the inventory turnover rate for this game?

Correct Answer
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Which activity is most apt to reduce the inventory period for a grocery store?

Correct Answer
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Wrecker Automotive has sales for the year of $356,450, cost of goods sold equal to 59 percent of sales, and an average inventory of $42,500.The profit margin is 6 percent and the tax rate is 21 percent.How many days on average does it take the firm to sell an inventory item?

Correct Answer
verified

Which of these is the most indicative of a flexible short-term financial policy?

Correct Answer
verified

Pepito's has sales for the year of $166,569 and cost of goods sold of $94,600.The firm carries an average inventory of $21,100 and has an average accounts payable balance of $19,600.What is the inventory period?

Correct Answer
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Which one of the following commences on the day inventory is purchased and ends on the day the payment for the sale of that inventory is collected? Assume all sales and purchases are on credit.

Correct Answer
verified

Which industry is most apt to have the shortest operating cycle?

Correct Answer
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Correct Answer
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Which characteristic applies to commercial paper?

Correct Answer
verified

Correct Answer
verified

The length of time a retailer owes its supplier for an inventory purchase is called the:

Correct Answer
verified

Which statement is true?

Correct Answer
verified

Correct Answer
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Which one of the following is a graphical representation of the operating and cash cycles?

Correct Answer
verified

Which of the following tend to rise when a firm switches to a flexible financial policy from a restrictive financial policy? I.Restocking costs II.Price reductions to offset limited selection III.Storage costs IV.Current asset opportunity costs

Correct Answer
verified

Which statement related to a cash budget is correct?

Correct Answer
verified

Robert's Cards and Gifts has estimated quarterly sales for next year, starting with Quarter 1, of $43,930, $47,495, $37,835, and $91,655.The accounts receivable period is 13 days.What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.

Correct Answer
verified

The Happy Flapjack Diner increased its operating cycle from 72 days to 74 days while the cash cycle decreased by 3 days.How have these changes affected the accounts payable period?

Correct Answer
verified

Moore & Moore has just finished projecting its expected cash receipts and expenditures for next year.What is this projection called?

Correct Answer
verified

Exam 16: Short-Term Financial Planning

Coolman Outdoor has estimated monthly sales for February through May of $12,480, $13,260, $13,910, and $14,820, respectively.If the accounts receivable period is 45 days, how much will be collected in May? Assume each month has 30 days.

Correct AnswerverifiedShow Answer

Gaming Station has to restock a popular electronic game every five days as it completely sells out in that period of time.What is the inventory turnover rate for this game?

Correct AnswerverifiedShow Answer

Which activity is most apt to reduce the inventory period for a grocery store?

Correct AnswerverifiedShow Answer

Wrecker Automotive has sales for the year of $356,450, cost of goods sold equal to 59 percent of sales, and an average inventory of $42,500.The profit margin is 6 percent and the tax rate is 21 percent.How many days on average does it take the firm to sell an inventory item?

Correct AnswerverifiedShow Answer

Which of these is the most indicative of a flexible short-term financial policy?

Correct AnswerverifiedShow Answer

Pepito's has sales for the year of $166,569 and cost of goods sold of $94,600.The firm carries an average inventory of $21,100 and has an average accounts payable balance of $19,600.What is the inventory period?

Correct AnswerverifiedShow Answer

Which one of the following commences on the day inventory is purchased and ends on the day the payment for the sale of that inventory is collected? Assume all sales and purchases are on credit.

Correct AnswerverifiedShow Answer

Which industry is most apt to have the shortest operating cycle?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which characteristic applies to commercial paper?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The length of time a retailer owes its supplier for an inventory purchase is called the:

Correct AnswerverifiedShow Answer

Which statement is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is a graphical representation of the operating and cash cycles?

Correct AnswerverifiedShow Answer

Which of the following tend to rise when a firm switches to a flexible financial policy from a restrictive financial policy? I.Restocking costs II.Price reductions to offset limited selection III.Storage costs IV.Current asset opportunity costs

Correct AnswerverifiedShow Answer

Which statement related to a cash budget is correct?

Correct AnswerverifiedShow Answer

Robert's Cards and Gifts has estimated quarterly sales for next year, starting with Quarter 1, of $43,930, $47,495, $37,835, and $91,655.The accounts receivable period is 13 days.What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.

Correct AnswerverifiedShow Answer

The Happy Flapjack Diner increased its operating cycle from 72 days to 74 days while the cash cycle decreased by 3 days.How have these changes affected the accounts payable period?

Correct AnswerverifiedShow Answer

Moore & Moore has just finished projecting its expected cash receipts and expenditures for next year.What is this projection called?

Correct AnswerverifiedShow Answer

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