Exam 19: Working Capital Management

Your firm purchases goods from its supplier on terms of 1/10 net 30.The effective annual cost to your firm if it chooses not to take advantage of the trade discount offered is closest to:

What is the effective annual cost of credit terms of 2/20,net 60,if the firm stretches the accounts payable to 80 days?

A firm has average accounts receivable of $2 million,and,on average,takes 39 days to collect on its sales.What is the total amount of the firm's sales?

Monroe Electronics' projected net income and free cash flows are given above in thousands of dollars.Monroe expects their net income and increases in net working capital to increase by 6% per year.If Monroe were able to reduce its annual increase in working capital by 15% without affecting any other part of the business adversely,what would be the effect of this reduction on Monroe's value,given a cost of capital of 11%?

Which of the following best describes the availability float?

The cash conversion cycle (CCC)is defined as

Which of the following would increase a firm's cash conversion cycle?

Your firm purchases $100,000 worth of goods from its supplier on terms of 2/20 net 60.How much more does your firm pay if it chooses not to take advantage of the trade discount?

Gencom International has accounts receivable days of 34,and accounts payable days of 52.If its cash conversion cycle is -7 days,what is Gencom's inventory days?

A financial manager who wants her investment to have a higher return would choose to invest some of her firm's excess cash in commercial paper over Treasury bonds.

Use the table for the question(s) below. Luther Industries had sales of $980 million and a cost of goods sold of $560 million in 2006. A simplified balance sheet for the firm appears below: Luther Industries Balance Sheet As of December 31, 2011 (millions of dollars) -Luther's Accounts Receivable days is closest to:

What are the five Cs of Credit?

Which of the following money market investments is a short-term debt obligation of the Canadian government?

The difference between a firm's operating cycle and its cash cycle is

A firm has average accounts receivable of $85,000,and,on average,takes 50 days to collect on its sales.What is the total amount of the firm's sales?

What is the effective cost of credit terms of 2/10,net 30 if the firm stretches the accounts payable to 45 days?

ALT had $25 million in sales last year.Its cost of goods sold was $15 million and its average inventory balance was $3 million.The average days of inventory in the industry is 65 days.What would ALT's average inventory need to be so that it would meet the industry average?

What is the discount period?

Which of the following is the major benefit to a firm of using just-in-time inventory management?

Which of the following best describes just-in-time inventory management?