Exam 14: Working Capital Management and Policies

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

Everything else held constant,will an increase in the amount of inventory on hand increase or decrease the firm's profitability?

Which of the following is a checking account that the firm sets up so that the bank agrees to automatically transfer funds from an interest-bearing account to pay off any checks presented?

CM Enterprises estimates that it takes,on average,seven days for their customers' payments to reach them,one day for the payments to be processed and deposited by their bookkeeping department,and three more days for the checks to clear once they're deposited.What is their collection float?

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

Which of the following actions will cause a firm's net working capital to decrease?

Suppose that Freddy's Fries has annual sales of $500,000,cost of goods sold of $375,000,average inventories of $9,000,and average accounts receivable of $25,000.Assuming that all of Freddy's sales are on credit,what will be the firm's operating cycle?

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?

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

Would it be worth it to incur a compensating balance of $15,000 in order to get a 2-percent-lower interest rate on a 1-year,pure discount loan of $1,000,000?

"The net amount of current assets that the firm has to fund,above and beyond those that someone else funds for them" is referred to as:

B&B Cos.has sales of $732,000 and cost of goods sold of $323,000.The firm had a beginning inventory of $48,000 and an ending inventory of $39,000.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 57 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?

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?

Would it be worth it to incur a compensating balance of $2,000 in order to get a 1.5-percent-lower interest rate on a 1-year,pure discount loan of $100,000?

Operating cycle is measured as:

B&O Cos.has sales of $850,000 and cost of goods sold of $490,000.The firm had a beginning inventory of $69,000 and an ending inventory of $54,000.What is the length of the days' sales in inventory?

Suppose your firm is seeking a 7-year,amortizing $100,000 loan with annual payments and your bank is offering you the choice between a $110,000 loan with a $10,000 compensating balance and a $100,000 loan without a compensating balance.If the interest rate on the $100,000 loan is 7 percent,how low would the interest rate on the loan with the compensating balance have to be in order for you to choose it?

Suppose your firm is seeking a five-year,amortizing $900,000 loan with annual payments and your bank is offering you the choice between a $950,000 loan with a $50,000 compensating balance and a $900,000 loan without a compensating balance.If the interest rate on the $900,000 loan is 9.5 percent,how low would the interest rate on the loan with the compensating balance have to be in order for you to choose it?