Exam 14: Working Capital Management and Policies

Drawing,Inc.has sales of $860,000 and cost of goods sold of $450,000.The firm had a beginning inventory of $50,000 and an ending inventory of $59,000.What is the length of the days' sales in inventory?

To trace cash flows through the firm's operations,we must measure which of the following? (It is the time necessary to acquire raw materials,turn them into finished goods,sell them,and receive payment for them.)

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?

Which of the following is NOT a fundamental factor ignored by the target cash balance models?

Suppose that Tucker Industries has annual sales of $5 million,cost of goods sold of $2.78 million,average inventories of $1,125,000,and average accounts receivable of $500,000.Assuming that all of Tucker's sales are on credit,what will be the firm's 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?

PBJ Enterprises estimates that it takes,on average,three days for their customers' payments to reach them,three days 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?

MC Enterprises estimates that it takes,on average,seven days for their customers' payments to reach them,two days 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?

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?

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?

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

Suppose that Sam Industries has annual sales of $2 million,cost of goods sold of $950,000,average inventories of $45,000,and average accounts receivable of $90,000.Assuming that all of Sam's sales are on credit,what will be the firm's operating cycle?

BOGO Shoes would like to maintain their cash account at a minimum level of $100,000,but expects the standard deviation in net daily cash flows to be $7,000; the effective annual rate on marketable securities to be 6.5 percent per year; and the trading cost per sale or purchase of marketable securities to be $175 per transaction.What will be their optimal cash return point?

Which of the following will increase the operating cycle?

Happy Feet would like to maintain their cash account at a minimum level of $75,000,but expects the standard deviation in net daily cash flows to be $5,000; the effective annual rate on marketable securities to be 7 percent per year; and the trading cost per sale or purchase of marketable securities to be $150 per transaction.What will be their optimal upper cash limit?

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

If a firm has a cash cycle of 32 days and an operating cycle of 67 days,what is its payables turnover?