Exam 14: Working Capital and Policies

Hollywood Shoes would like to maintain their cash account at a minimum level of $50,000,but expects the standard deviation in net daily cash flows to be $4,000; the effective annual rate on marketable securities to be 6 percent per year; and the trading cost per sale or purchase of marketable securities to be $100 per transaction.What will be their optimal upper cash limit?

If a firm has a cash cycle of 20 days and an operating cycle of 60 days,what is its payables turnover?

Which of the following is NOT one of the five basic elements of the kaizen approach of productivity improvement?

Scribble,Inc.has sales of $80,000 and cost of goods sold of $64,000.The firm had a beginning inventory of $10,000 and an ending inventory of $12,000.What is the length of the days' sales in inventory?

Suppose that Farrah's Hair Care has annual sales of $100,000,cost of goods sold of $65,000,average inventories of $2,000,and average accounts receivable of $5,000.Assuming that all of Farrah's sales are on credit,what will be the firm's operating cycle?

Rose N More Resources faces a smooth annual demand for cash of $50 million; incurs transaction costs of $350 every time they sell marketable securities,and can earn 5.2 percent on their marketable securities.What will be their optimal cash replenishment level?

Suppose that Jamie's Jams has annual sales of $900,000; cost of goods sold of $600,000; average inventories of $11,000; average accounts receivable of $50,000; and an average accounts payable balance of $30,000.Assuming that all of Jamie's sales are on credit,what will be the firm's cash cycle?

Would a firm ever use short-term debt to finance permanent current assets? Why or why not?

Elle Mae Industries has a cash balance of $50,000; accounts payable of $150,000; inventory of $190,000; accounts receivable of $250,000; notes payable of $210,000; and accrued wages and taxes of $40,000.How much net working capital does the firm need to fund?

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?

Suppose that Darlene's Donuts has annual sales of $200,000; cost of goods sold of $90,000; average inventories of $4,000; average accounts receivable of $10,000; and an average accounts payable balance of $7,000.Assuming that all of Darlene's sales are on credit,what will be the firm's cash cycle?

Which of these is an entity who will buy accounts receivable before they are due on a discounted basis,with the spread between the discounted price and the receivable's face value providing them with the expected compensation for both the time value of money and for the expected level of defaults amongst the accounts receivable?

If a firm has a cash cycle of 39 days and an operating cycle of 88 days,what is its average payment period?

If the firm wants to identify the percentage of accounts receivable that are over 90 days old,the firm should prepare:

Carrying costs are associated with having current assets and fall into two general categories.List those two categories.

Team Sports Industries has a cash balance of $60,000; accounts payable of $40,000; inventory of $100,000; accounts receivable of $110,000; notes payable of $80,000; and accrued wages and taxes of $10,000.How much net working capital does the firm need to fund?

Rose Axels faces a smooth annual demand for cash of $8 million; incurs transaction costs of $200 every time they sell marketable securities; and can earn 3.8 percent on their marketable securities.What will be their optimal cash replenishment level?

If a firm has a cash cycle of 30 days and an operating cycle of 64 days,what is its average payment period?

Hollywood Shoes would like to maintain their cash account at a minimum level of $50,000,but expects the standard deviation in net daily cash flows to be $4,000; the effective annual rate on marketable securities to be 6 percent per year; and the trading cost per sale or purchase of marketable securities to be $100 per transaction.What will be their optimal cash return point?

If a firm has a cash cycle of 10 days and an operating cycle of 43 days,what is its average payment period?