Exam 19: Short-Term Financial Planning

Your accountant suspects a mistake in the computation of the payables period,which has been reported at 54.75 days.Calculate the correct payables period,given the following: annual sales = $1,200,000,annual cost of goods sold = $700,000,average accounts payable = $105,000.

What is the length of the cash conversion cycle for a firm with $50,000 in inventory,$60,000 in average receivables,$30,000 in average payables,annual sales of $700,000,and a cost of goods sold of 75%?

Ignoring the risk of theft,cash balances cannot spoil,yet managers are concerned with carrying costs.Why?

Biotech firms require large amounts of cash if their drugs succeed in gaining regulatory approval.Therefore,these firms often have substantial cash holdings to fund their possible investment needs.

Which of the following statements is correct concerning marketable securities on a firm's balance sheet?

Which of the following is correct for a firm that reduces its accounts receivable balance from the previous quarter?

The factoring firm bears responsibility for default on accounts receivable purchased from a firm.

Issuing additional long-term debt of $5 million and buying new long-term assets worth $5 million will result in a net cash flow of:

If the statement of sources and uses of cash shows a decrease in cash balance,which of the following changes might have eliminated that decrease?

Field warehousing can be an important source of:

The most common benchmarks of bank loans are the London Interbank Offered Rate (LIBOR),the federal funds rate,or the bank's prime rate.

A company that borrows $1 million short term and invests the proceeds in inventory will see its cash position unchanged.

As for the preparation of cash budgets,capital expenditures are:

A firm has borrowed $1 million and assigned its receivables to the lender.Because of defaults,the receivables prove insufficient to cover the debt.In this case,the:

If a firm decided to speed up its collection from its customers by reducing the receivables period and kept the inventory period and payable period the same,then:

How does long-term financing policy affect short-term financing requirements?

How do firms develop a short-term financing plan that meets their need for cash?

Create the statement of sources and uses of cash from the following entries:

A company that sells $5 million of marketable securities for cash will see no change in its net working capital.

In "field warehousing" the inventory is kept by the: