Exam 26: Short-Term Finance and Planning

Your firm has a net cash inflow for the quarter of -$30 (negative). The beginning cash balance is $15. Company policy is to maintain a minimum cash balance of $5 and borrow only the amount that is necessary to maintain that balance. How much does your firm need to borrow to have a zero cumulative surplus?

Martinique and Son have a 60 day collection period. Sales for the next calendar year are estimated at $1,200,$1,100,$2,300 and $1,800,respectively,by quarter starting with the first quarter of the year. Given this information,which one of the following statements is correct? Assume that a year has 360 days.

The forecast of cash receipts and disbursements for the next planning period is called a:

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: Blue Moon Corporation's payables period 2011 is (use average payables) _________.

Amanda's Interior Design has sales of $462,000,costs of goods sold of $308,000 and average accounts receivable of $48,900. How long does it take its credit customers to pay for their purchases?

It has been argued that if one could perfectly synchronize a firm's cash inflows and outflows,short-term financial planning would be unnecessary. Do you agree? What actions can the firm's financial decision-makers take to reduce the degree of asynchronization? Why should this be a concern?

Your firm sells $2,000 worth of goods in December,$1,700 worth in January,$1,500 in February and $1,600 in March. Your cost is 60% of the retail price. You have a receivables period of 30 days and a payables period of 45 days. You buy your products one month prior to selling them. Which one of the following statements is correct given this information?

A firm has an inventory turnover rate of 16,a receivables turnover rate of 21 and a payables turnover rate of 11. How long is the operating cycle?

Accounts receivable and inventory are some of the most liquid assets a firm owns and their market values are typically fairly close to book value. Even so,in the eyes of many lenders,these assets make for inadequate collateral on loans,particularly if the business looking to borrow the money is in a liquidity crisis. Why do you think this is the case?

The appropriate amount of short-term borrowing is determined by:

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: Blue Moon Corporation's accounts receivable turnover ratio for 2011 is (use average accounts receivable) _______.

Which of the following decreases cash?

Flexible short-term financial policies tend to:

Stoney Brooke,Inc. has sales of $890,000 and cost of goods sold of $640,000. The firm had a beginning inventory of $36,000 and an ending inventory of $46,000. What is the length of the inventory period?

Dallas and More (D & M) sells its inventory in 82 days on average. Its average customer charges his purchase on a credit card whereby payment is received in ten days. On the other hand,D & M takes 56 days on average to pay for its purchases. Given this information,what is the length of D & M's operating cycle?

The length of time between the sale of inventory and the collection of cash from receivables is called the:

The length of time between the acquisition of inventory by a firm and the payment by the firm for that inventory is called the:

Blue Moon Corporation's Balance Sheet and Income Statement as shown below: The inventory period for 2011 for Blue Moon Corporation is (use average inventory) _______.

With a flexible policy with regard to short term financing,over a year a firm will have:

Which one of the following is a source of cash?