Blanchard Corporation is estimating its cash collections for the first quarter of next year (January, February and March).The company has provided you with monthly sales along with historical cash collections data.Calculate the total cash received for January, February and March given the following data: \[\begin{array}{ | c | c | c | c | c | c | } \hline & \text { November } & \text { December } & \text { January } & \text { February } & \text { March } \\ \hline \text { Sales } & \$ 250,000 & \$ 270,000 & \$ 290,000 & \$ 305,000 & \$ 315,000 \\ \hline \text { Estimated Collection: }\\ \hline 60 \% & \text { In month of sale } & & & \\ \hline 30 \% & \text { In month after sale } & & & \\ \hline 8 \% & \text { In second month after sale } & & & \\ \hline 2 \% & \text { Never Collected } & & & \\ \hline \end{array}\]

The answer of Blanchard Corporation is estimating its cash collections...

Calculate the Cash Conversion and Operating cycle, given the following information: \[\begin{array} { | l | c | } \hline \text { Data: } & \\ \hline \text { Average Inventory } & 840.00 \\ \hline \text { Average AR } & 600.00 \\ \hline \text { Average AP } & 1,200.00 \\ \hline \text { sales } & 7,000.00 \\ \hline \text { COGB } & 6,000.00 \\ \hline \end{array}\]

A) 9.39 days and 82.39 days B) 15.45 days and 101.52 days C) 17.67 days and 111.56 days D) 20.25 days and 115.50 days A) 9.39 days and 82.39 days B) 15.45 days and 101.52 days C) 17.67 days and 111.56 days D) 20.25 days and 115.50 days

Calculate the change in cash given the following information: \[\begin{array} {| l | r| } \hline \text { Increase in AR } & 5,000 \\ \hline \text { Decrease in Inventory } & 25,000 \\ \hline \text { Decrease in Accounts Payable } & 10,000 \\ \hline \text { Increase in Taxes Payable } & 2,500 \\ \hline \text { Issued Long Term Debt } & 300,000 \\ \hline \text { Issued Common Shares } & 250,000 \\ \hline \text { Issued Dividends } & 60,000 \\ \hline \end{array}\]

A) $532,500 B) $522,500 C) $512,500 D) $502,500 A) $532,500 B) $522,500 C) $512,500 D) $502,500

Exam 20: Short-Term Financial Planning

A firm sells its accounts receivable to a factor at a 2% discount.If the average collection period is 1 month, determine the effective annual rate of interest on the factoring.

(Multiple Choice)

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Question 21

An increase in long-term assets is a source of cash.

(True/False)

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Question 22

A firm sells its accounts receivable to a factor at a 5% discount.If the average collection period is 1 month, determine the effective annual rate of interest on the factoring.

(Multiple Choice)

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Question 23

Calculate the accounts receivable period for a firm with annual credit sales of $10 million and average accounts receivable of $2 million.

(Multiple Choice)

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Question 24

Which of the following situations will improve the current ratio if it is initially less than 1.0?

(Multiple Choice)

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Question 25

If a firm increases its accounts payable period, other things equal, it increases the cash conversion cycle.

(True/False)

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Question 26

As a firm's cash conversion cycle increases, the firm:

(Multiple Choice)

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Question 27

Field warehousing is a system of protecting the borrower against spoiled or stolen inventory.

(True/False)

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Question 28

What is the cash conversion cycle for a firm with a receivables period of 40 days, a payables period of 30 days, and an inventory period of 60 days?

(Multiple Choice)

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Question 29

Why do firms need to invest in net working capital?

(Essay)

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Question 30

Calculate the simple interest on a bank loan of $200,000 for a month, with a quoted rate of 6% simple interest.At the end of the month how much would you need to repay?

(Essay)

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Question 31

Blanchard Corporation is estimating its cash collections for the first quarter of next year (January, February and March).The company has provided you with monthly sales along with historical cash collections data.Calculate the total cash received for January, February and March given the following data: November December January February March Sales \ 250,000 \ 270,000 \ 290,000 \ 305,000 \ 315,000 Estimated Collection: 60\% In month of sale 30\% In month after sale 8\% In second month after sale 2\% Never Collected

(Essay)

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Question 32

If a firm's current ratio exceeds 1.0, what happens as a result of paying cash to reduce accounts payable?

(Multiple Choice)

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Question 33

A reduction in inventory levels from year-end to year-end would be considered a source of cash.

(True/False)

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Question 34

The longer the firm's accounts payable period, the:

(Multiple Choice)

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Question 35

Calculate the Cash Conversion and Operating cycle, given the following information: Data: Average Inventory 840.00 Average AR 600.00 Average AP 1,200.00 sales 7,000.00 COGB 6,000.00

(Multiple Choice)

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Question 36

When a loan is secured by receivables, the firm assigns the receivables to the bank.If the firm fails to repay the loan, the bank can collect the receivables from the firm's customers and use the cash to pay off the debt.

(True/False)

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Question 37

Calculate the change in cash given the following information: Increase in AR 5,000 Decrease in Inventory 25,000 Decrease in Accounts Payable 10,000 Increase in Taxes Payable 2,500 Issued Long Term Debt 300,000 Issued Common Shares 250,000 Issued Dividends 60,000

(Multiple Choice)

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Question 38

Maintaining a compensating balance will:

(Multiple Choice)

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Question 39

If the effective rate of interest if 15.55% based on monthly compounding, determine the nominal rate of interest.

(Multiple Choice)

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Question 40

Exam 20: Short-Term Financial Planning

A firm sells its accounts receivable to a factor at a 2% discount.If the average collection period is 1 month, determine the effective annual rate of interest on the factoring.

An increase in long-term assets is a source of cash.

A firm sells its accounts receivable to a factor at a 5% discount.If the average collection period is 1 month, determine the effective annual rate of interest on the factoring.

Calculate the accounts receivable period for a firm with annual credit sales of $10 million and average accounts receivable of $2 million.

Which of the following situations will improve the current ratio if it is initially less than 1.0?

If a firm increases its accounts payable period, other things equal, it increases the cash conversion cycle.

As a firm's cash conversion cycle increases, the firm:

Field warehousing is a system of protecting the borrower against spoiled or stolen inventory.

What is the cash conversion cycle for a firm with a receivables period of 40 days, a payables period of 30 days, and an inventory period of 60 days?

Why do firms need to invest in net working capital?

Calculate the simple interest on a bank loan of $200,000 for a month, with a quoted rate of 6% simple interest.At the end of the month how much would you need to repay?

If a firm's current ratio exceeds 1.0, what happens as a result of paying cash to reduce accounts payable?

A reduction in inventory levels from year-end to year-end would be considered a source of cash.

The longer the firm's accounts payable period, the:

Calculate the Cash Conversion and Operating cycle, given the following information: Data: Average Inventory 840.00 Average AR 600.00 Average AP 1,200.00 sales 7,000.00 COGB 6,000.00

When a loan is secured by receivables, the firm assigns the receivables to the bank.If the firm fails to repay the loan, the bank can collect the receivables from the firm's customers and use the cash to pay off the debt.

Calculate the change in cash given the following information: Increase in AR 5,000 Decrease in Inventory 25,000 Decrease in Accounts Payable 10,000 Increase in Taxes Payable 2,500 Issued Long Term Debt 300,000 Issued Common Shares 250,000 Issued Dividends 60,000

Maintaining a compensating balance will:

If the effective rate of interest if 15.55% based on monthly compounding, determine the nominal rate of interest.

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