Exam 14: Working Capital Management and Policies

PNB Cos. has sales of $250,000 and cost of goods sold of $120,000. The firm had a beginning inventory of $19,000 and an ending inventory of $13,000. What is the length of the days' sales in inventory?

Which of these is the period of time after a check has been written, but not yet cleared and deposited?

Which of the following will increase the operating cycle?

Would it be worth it to incur a compensating balance of $4,000 in order to get a 1.5-percent-lower interest rate on a 1-year, pure discount loan of $300,000?

What effect does increasing the standard deviation in daily cash flows have on the cash return point in the Miller-Orr model?

Scribble, Inc. has sales of $100,000 and cost of goods sold of $75,000. The firm had a beginning inventory of $20,000 and an ending inventory of $22,000. What is the length of the days' sales in inventory?

The optimal cash replenishment level will increase with all of the following changes EXCEPT:

Painting, Inc. has sales of $400,000 and cost of goods sold of $275,000. The firm had a beginning inventory of $42,000 and an ending inventory of $38,000. What is the length of the days' sales in inventory?

If a firm has a cash cycle of 25 days and an operating cycle of 80 days, what is its average payment period?

Suppose that LilyMac Photography has annual sales of $290,000; cost of goods sold of $155,000; average inventories of $3,500; average accounts receivable of $21,000; and an average accounts payable balance of $10,000. Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle?

The area of management concerned with designing and overseeing the process of production is which of the following?

The operating cycle will increase with all of the following changes EXCEPT:

If a firm has a cash cycle of 25 days and an operating cycle of 80 days, what is its payables turnover?

Choosing the optimal level of investment in each current asset type involves a trade-off between carry costs and:

Betty Boop has saved enough money to go back to grad school. She is planning to put the money in a money market account where it will earn 2.5 percent. If she anticipates slowly drawing the money out over the course of her time in grad school at a constant rate of $29,000 per year, but is charged a commission of $7.95 every time she sells shares, how much should she take out of the mutual fund at a time?

Which of the following current asset financing policies reflects the decision to finance the peaks of current assets with long-term debt and equity that provides the firm with a surplus of cash and marketable securities most of the time, except during peak asset demand?

Which of the following describes the place over which the bank-to-bank transfers are conducted within the United States?

If a firm has a cash cycle of 47 days and an operating cycle of 92 days, what is its average payment period?

A production strategy that attempts to improve a firm's return on investment by reducing in-process inventory and associated carrying costs as much as possible is which of the following?

If a firm starts selling its accounts receivable to a factor, how will the firm's cash cycle change?