Exam 17: Working Capital Management

Forest Living has annual credit sales of $11.65 million.The average collection period is 18 days.What is the average investment in accounts receivable as shown on the balance sheet? Assume a 365-day year.

In a typical month, a company receives 39 checks totaling $168,000.The payment on these checks is normally delayed by an average of 2.7 days.What is the average daily float? Assume 30 days in a month.

As of this morning, a firm had a ledger balance of $1,695 with no outstanding deposits or checks.Today, the firm deposited five checks in the amount of $32each and wrote a check in the amount of $465.What is the amount of the collection float as of the end of the day assuming none of these checks had cleared?

Which one of the following is a primary benefit of implementing zero-balance accounts into a cash management system?

Which of these would be the most common evidence of indebtedness when a sale is made on open account?

Treble Note Music sells 1380 musical instruments a year at an average price per instrument of $795.All sales are credit sales with terms of 2/10, net 30.The company has found that 76 percent of its customers take advantage of the discounted price.What is the amount of the firm's average accounts receivable? The discount amount is applied to a customer's account only after payments have been received and processed.Assume a 365-day year.

Cash concentration is best defined as:

Which of these is most apt to delay the collection of cash?

When are funds generally transferred into zero-balance accounts?

The terms of sale are best defined as the:

You place an order for 380 units of Good Y at a unit price of $49.The supplier offers terms of 2/10, net 30.The supplier is offering you a discount of _____ on your order if you pay within ____ days.

Which of these will tend to decrease the length of the credit period?

Credit scoring is the: