Exam 18: Short-Term Finance and Planning

At the beginning of the year,you have an outstanding short-term loan of $274 which was used to cover your cash needs for the previous year.The interest expense for the year is $19.The projected net cash flow for this year is $123,prior to any payment of principal or interest on this loan.What is your anticipated loan balance at year end?

Forest Gardens,Inc.,has a beginning receivables balance on February 1 of $730.Sales for February through May are $720,$780,$820,and $850,respectively.The accounts receivable period is 30 days.What is the amount of the April collections? Assume a year has 360 days.

Here are some important figures from the budget of Nashville Nougats,Inc.,for the second quarter of 2012: The company predicts that 3 percent of its credit sales will never be collected,36 percent of its sales will be collected in the month of sale,and the remaining 61 percent will be collected in the following month.Credit purchases will be paid in the month following the purchase. In March 2012,credit sales were $302,400,and credit purchases were $224,640.The April 1 cash balance was $403,200.What is the cash balance at the end of May?

Which one of the following statements is correct?

Your firm has an average collection period of 42 days.Current practice is to factor all receivables immediately at a 4 percent discount.Assume that default is extremely unlikely.What is the effective cost of borrowing?

The Athletic Sports Store has a beginning receivables balance on January 1 of $410.Sales for January through April are $440,$480,$690,and $720,respectively.The accounts receivable period is 60 days.How much did the firm collect in the month of April? Assume a year has 360 days.

A company currently has a 51 day cash cycle.Assume the firm changes its operations such that it decreases its receivables period by 2 days,increases its inventory period by 3 days,and increases its payables period by 4 days.What will the length of the cash cycle be after these changes?

Consider the following financial statement information for the Bulldog Icers Corporation: How long is the cash cycle?

Jill is the CFO of Summertime Adventures which is a seasonal firm specializing in products related to water sports.The firm purchases inventory one month before it is sold and pays for its purchases 60 days after the invoice date.Sales are highest during July and August.Currently,Jill is preparing the cash disbursements section of the firm's cash budget.Which one of the following statements is supported by this information?

The Delta Fish Hatchery factors its accounts receivables immediately at a 2 percent discount.The average collection period is 34 days.Assume that all accounts are collected in full.What is the effective annual interest rate on this arrangement?

As of the beginning of the quarter,Swenson's,Inc.had a cash balance of $460.During the quarter,the company collected $480 from customers and paid suppliers $360.The company also paid an interest payment of $20 and a tax payment of $110.In addition,the company repaid $140 on its long-term debt.What is Callahan's cash balance at the end of the quarter?

An increase in which one of the following will decrease the cash cycle,all else equal?

Metal Products Co.has an inventory period of 53 days,an accounts payable period of 68 days,and an accounts receivable turnover rate of 18.What is the length of the cash cycle?

The Mountain Top Shoppe has sales of $512,000,average accounts receivable of $31,400 and average accounts payable of $24,800.The cost of goods sold is equivalent to 71 percent of sales.How long does it take The Mountain Top Shoppe to pay its suppliers?

Which one of the following managers determines which customers must pay cash and which can charge their purchases?

The length of time between the sale of inventory and the collection of the payment for that sale is called the:

Costs that increase as a firm acquires additional current assets are called _____ costs.

Your firm has an inventory turnover rate of 14,a payables turnover rate of 8,and a receivables turnover rate of 19.How long is your firm's operating cycle?

Metal Designs,Inc.,historically produced products for inventory.Now,the firm only produces a product when it receives an actual order from a customer.All else equal,this change will:

The Harvester collects 25 percent of sales in the month of sale,60 percent of sales in the month following the month of sale,and 15 percent of sales in the second month following the month of sale.During the month of April,the firm will collect: