Exam 14: Working Capital Management and Policies

If a firm has a cash cycle of 25 days and an operating cycle of 80 days, what is its payables turnover?

Painting, Inc. has sales of $400,000 and cost of goods sold of $275,000. The firm had a beginning inventory of $42,000 and an ending inventory of $38,000. What is the length of the days' sales in inventory?

Suppose that LilyMac Photography has annual sales of $290,000, cost of goods sold of $155,000, average inventories of $3,500, average accounts receivable of $21,000, and an average accounts payable balance of $10,000. Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle?

If a firm has a cash cycle of 41 days and an operating cycle of 76 days, what is its average payment period?

Daisy D Industries has a cash balance of $75,000; accounts payable of $140,000; inventory of $300,000; accounts receivable of $350,000; notes payable of $145,000; and accrued wages and taxes of $80,000. How much net working capital does the firm need to fund?

For most businesses, particularly smaller ones, the most common way to cover a short-term financing need is to apply at a bank for which of the following?

Which of these is a short-term loan secured by a company's assets?

If a firm has a cash cycle of 32 days and an operating cycle of 67 days, what is its payables turnover?

MC Enterprises estimates that it takes, on average, seven days for their customers' payments to reach them, two days for the payments to be processed and deposited by their bookkeeping department, and three more days for the checks to clear once they're deposited. What is their collection float?

CM Enterprises estimates that it takes, on average, seven days for their customers' payments to reach them, one day for the payments to be processed and deposited by their bookkeeping department, and three more days for the checks to clear once they're deposited. What is their collection float?

John Boy Industries has a cash balance of $59,000, accounts payable of $139,000, inventory of $115,000, accounts receivable of $220,000, notes payable of $175,000, and accrued wages and taxes of $23,000. How much net working capital does the firm need to fund?

Which of the following actions will cause a firm's net working capital to decrease?

Why do firms offer customers discounts for paying early?

The financing policy that will result in investing in marketable securities when asset requirements are low is referred to as

The inventory order quantity that minimizes total holding and ordering costs is which of the following?

Suppose your firm is seeking a seven-year, amortizing $400,000 loan with annual payments and your bank is offering you the choice between a $410,000 loan with a $10,000 compensating balance and a $400,000 loan without a compensating balance. If the interest rate on the $400,000 loan is 9.5 percent, how low would the interest rate on the loan with the compensating balance have to be in order for you to choose it?

If a firm has a cash cycle of 75 days and an operating cycle of 120 days, what is its payables turnover?

Which is not one of the five C's in credit analysis?

Which of the following is defined as the cost or forgone opportunity of using an asset already in use by the firm, or a person already employed by the firm, in a new project?

All of the following will result in an increase in net working capital EXCEPT