Exam 13: The Management of Working Capital

Use the information below to answer the following questions Aqua Ltd has forecast the yearly demand for its product as 5,000 units. 100 units of material must be used to produce the product. The cost of placing a single order for raw materials is $20, and the cost of holding one unit of material is $0.40 a year. -The statement that is not true concerning the just-in-time inventory management system is:

If inventory is turned over 8 times a year, what is the inventory turnover period in days?

Which item is not part of working capital?

Annual demand for product W is 120,000 units and the lead-time for orders is four weeks. Demand is steady throughout the year. Assuming no buffer stock is held, at what level of inventory should the company reorder product W?

Which of these is not a cost of holding insufficient levels of inventory?

Working capital for a manufacturer normally makes up ________ percentage of total assets.

Which of the following is not necessarily true? Increasing the cash discount which a firm offers to its debtors for prompt payment will:

Which of the following is not and assumption of the economic order quantity model?

Which statement concerning trade credit is true?

What is an advantage of holding inventory?

The firm's operating cash cycle is:

Which changes would increase a firm's net working capital, all other things remaining constant?

A firm has annual credit sales of $5,000,000 and an average collection period of 52 days. What is their average accounts receivable balance, assuming a 365-day year?

Which of the following is not one of the 'five C's' of deciding which customers should be granted credit?

In relation to the economic order quantity model:

The ABC system of managing inventory:

Use the information below to answer the following questions Aqua Ltd has forecast the yearly demand for its product as 5,000 units. 100 units of material must be used to produce the product. The cost of placing a single order for raw materials is $20, and the cost of holding one unit of material is $0.40 a year. -Refer to the information above. The economic order quantity for raw materials is:

Which is one of the most difficult inventory costs to measure?

Which statement concerning inventory is not true?

Calculate the operating cash cycle in days if all sales are for cash, inventory is turned over 8 times a year and creditors are paid on average 5 times a year.