Exam 14: Working Capital Management and Policies

Daisy D Industries has a cash balance of $75,000; accounts payable of $140,000; inventory of $300,000; accounts receivable of $350,000; notes payable of $145,000; and accrued wages and taxes of $80,000.How much net working capital does the firm need to fund?

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

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

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

If demand for a firm's products suddenly slows down so that inventory increases while sales decrease,how will the firm's needs for net working capital react?

Which of the following is defined as the cost or forgone opportunity of using an asset already in use by the firm,or a person already employed by the firm,in a new project?

Which of the following is NOT one of the Baumol Model's unrealistic assumptions?

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

Dandee Lions,Inc.has a cash balance of $105,000; accounts payable of $290,000; inventory of $213,000; accounts receivable of $310,000; notes payable of $95,000; and accrued wages and taxes of $65,000.How much net working capital does the firm need to fund?

If a firm has a cash cycle of 18 days and an operating cycle of 29 days,what is its payables turnover?

Why do firms offer customers discounts for paying early?

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 Professional Photography has annual sales of $900,000; cost of goods sold of $450,000; average inventories of $5,000; average accounts receivable of $40,000; and an average accounts payable balance of $20,000.Assuming that all of Professional's sales are on credit,what will be the firm's cash cycle?

When the firm finances the seasonally adjusted average level of asset demand with long-term debt and equity,the firm is said to follow a:

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

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

If a firm has a cash cycle of 10 days and an operating cycle of 43 days,what is its payables turnover?

What must the rate be less than to be worth it to incur a compensating balance of $20,000 in order to get a 2 percent lower interest rate on a one-year,pure discount loan of $200,000?

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?

All of the following are the different types of float the firm may experience in its collections EXCEPT: