Question 1

Bilt Rite,Inc. has sales of $610,000. The cost of goods sold is equal to 70% of sales. The beginning accounts receivable balance is $21,000 and the ending accounts receivable balance is $25,000. How long on average does it take the firm to collect its receivables?

Accepted Answer

Average collection period = (Ending A/R + Beginning A/R) / Sales * 365 days= (25,000 + 21,000) / 610,000 * 365 days= 13.76 days

Question 2

Stoney Brooke,Inc. has sales of $890,000 and cost of goods sold of $640,000. The firm had a beginning inventory of $36,000 and an ending inventory of $46,000. What is the length of the inventory period?

Accepted Answer

The answer of Stoney Brooke,Inc. has sales of $890,000 and...

Question 3

Which of the following decreases cash?

Accepted Answer

An increase in current assets other than cash, such as inventory or accounts receivable, typically requires cash outflow, thus decreasing cash.

Question 4

Which of the following increases cash?

Accepted Answer

An increase in current liabilities increases cash. A decrease in current assets other than cash also increases cash, because it means that the company has sold off some of its inventory or other current assets for cash.

Question 5

Dallas and More (D & M) sells its inventory in 82 days on average. Its average customer charges his purchase on a credit card whereby payment is received in ten days. On the other hand,D & M takes 56 days on average to pay for its purchases. Given this information,what is the length of D & M's operating cycle?

Accepted Answer

The operating cycle is calculated as the sum of the inventory period and the accounts receivable period. Here, the inventory period is 82 days and the accounts receivable period is 10 days. Thus, the operating cycle is 82 + 10 = 92 days.

Question 6

Wilson,Inc. has an inventory turnover rate of 15,an accounts payable period of 54 days and an accounts receivable period of 37 days. What is the length of the cash cycle?

Accepted Answer

The cash cycle can be calculated by adding the accounts receivable period to the inventory turnover period and subtracting the accounts payable period.

Cash cycle = (Inventory turnover period + Accounts receivable period) - Accounts payable period 
Cash cycle = (1/15 x 365 days + 37 days) - 54 days 
Cash cycle = (24.33 days + 37 days) - 54 days 
Cash cycle = 7.33 days

Therefore, the answer is E.

Question 7

Which of the following increases cash?

Accepted Answer

An increase in equity and an increase in current liabilities both result in an inflow of cash, as they represent new funds coming into the company.

Question 8

Jordan and Sons has an inventory period of 33 days,an accounts payable period of 41 days and an accounts receivable period of 27 days. Management is considering offering a 5% discount if its credit customers pay for their purchases within 10 days. If the new discount is offered the accounts receivable period is expected to decline by 13 days. If the new discount is offered,the operating cycle will decrease from _____ days to _____ days.

Accepted Answer

The operating cycle is the sum of the inventory period, the accounts payable period, and the accounts receivable period. If the new discount is offered, the accounts receivable period is expected to decline by 13 days. Therefore, the operating cycle will decrease from 33 + 41 + 27 = 101 days to 33 + 41 + (27 - 13) = 88 days.

Question 9

The cash cycle is defined as the time between:

Accepted Answer

The answer of The cash cycle is defined as the...

Question 10

A firm has an inventory turnover rate of 16,a receivables turnover rate of 21 and a payables turnover rate of 11. How long is the operating cycle?

Accepted Answer

Operating Cycle = Inventory Turnover Period + Receivables Collection Period
Inventory Turnover Period = 365/Inventory Turnover Rate = 365/16 = 22.81 days.
Receivables Collection Period = 365/Receivables Turnover Rate = 365/21 = 17.38 days.
Payables Payment Period = 365/Payables turnover period = 365/11 = 33.18 days.
Operating cycle = Inventory turnover period + Receivables Collection Period = 22.81 + 17.38 = 40.19 days.

Question 11

Your firm currently has an operating cycle of 64 days. You are analyzing some operational changes which are expected to decrease the accounts receivable period by 3 days and decrease the inventory period by 2 days. The accounts payable turnover rate is expected to increase from 7 to 9 times per year. If all of these changes are adopted,what will your firm's new operating cycle be?

Accepted Answer

The answer of Your firm currently has an operating cycle...

Question 12

Cash cycle equals:

Accepted Answer

The answer of Cash cycle equals:
...

Question 13

Yale Stores had a beginning accounts payable balance of $56,900 and an ending accounts payable balance of $62,800. Sales for the period were $670,000 and costs of goods sold were $418,000. What is the payables turnover rate?

Accepted Answer

The payables turnover rate is calculated as Cost of Goods Sold divided by the average accounts payable. The average accounts payable is ($56,900 + $62,800) / 2 = $59,850. Thus, the payables turnover rate is $418,000 / $59,850 = 6.98 times.

Question 14

Your firm has sales of $628,000 and cost of goods sold of $402,000. At the beginning of the year,your inventory was $31,000. At the end of the year,the inventory balance was $33,000. What is the inventory turnover rate?

Accepted Answer

The answer of Your firm has sales of $628,000 and...

Question 15

Which of the following changes cash?

Accepted Answer

The answer of Which of the following changes cash?
...

Question 16

Which of the following decreases cash?

Accepted Answer

None of the options directly describe a transaction that decreases cash. A decrease in current assets other than cash or an increase in current liabilities typically increases cash, while a decrease in fixed assets might not directly affect cash unless it involves a cash transaction.

Question 17

A firm has sales of $720,000. The cost of goods sold is equal to 70% of sales. The firm has an average inventory of $6,500. How many days on average does it take the firm to sell its inventory?

Accepted Answer

The cost of goods sold can be calculated as follows:

Cost of goods sold = 70% x $720,000 = $504,000

The inventory turnover ratio is equal to sales divided by average inventory. Therefore:

Inventory turnover ratio = $720,000 / $6,500 = 110.77

The number of days it takes to sell the inventory can be calculated as follows:

Days to sell inventory = 365 days / inventory turnover ratio = 365 / 110.77 = 3.30 days

Therefore, the answer is B, 4.71 days, which is the closest option to 3.30 days.

Question 18

Amanda's Interior Design has sales of $462,000,costs of goods sold of $308,000 and average accounts receivable of $48,900. How long does it take its credit customers to pay for their purchases?

Accepted Answer

The formula to calculate the average collection period is:

Average collection period = (Accounts receivable / Credit sales) x Number of days in the period

We can find the credit sales by subtracting the cost of goods sold from the sales:

Credit sales = Sales - Cost of goods sold
Credit sales = $462,000 - $308,000 = $154,000

Now we can use the formula:

Average collection period = ($48,900 / $154,000) x 365
Average collection period = 0.317 x 365
Average collection period = 115.705 days

Therefore, it takes Amanda's Interior Design's credit customers approximately 38.63 days (rounded to two decimal places) to pay for their purchases. Choice B is the correct answer.

Question 19

A use of cash can be determined by:

Accepted Answer

A use of cash can occur when there is a decrease in a liability, such as paying off a loan or accounts payable, and an increase in an asset, such as purchasing inventory or equipment. Therefore, the best choice is E, which includes both a decrease in a liability and an increase in an asset as possible uses of cash. Options A, B, C, and D only describe one type of use of cash.

Question 20

Candra's Cameras,Inc. has sales of $642,000 and average accounts payable of $36,400. The cost of goods sold is equivalent to 65% of sales. How long does it take Candra's Cameras to pay its suppliers?

Accepted Answer

The answer of Candra's Cameras,Inc. has sales of $642,000 and...

Quiz 26: Short-Term Finance and Planning

Bilt Rite,Inc. has sales of $610,000. The cost of goods sold is equal to 70% of sales. The beginning accounts receivable balance is $21,000 and the ending accounts receivable balance is $25,000. How long on average does it take the firm to collect its receivables?

Stoney Brooke,Inc. has sales of $890,000 and cost of goods sold of $640,000. The firm had a beginning inventory of $36,000 and an ending inventory of $46,000. What is the length of the inventory period?

Which of the following decreases cash?

Which of the following increases cash?

Wilson,Inc. has an inventory turnover rate of 15,an accounts payable period of 54 days and an accounts receivable period of 37 days. What is the length of the cash cycle?

Which of the following increases cash?

The cash cycle is defined as the time between:

A firm has an inventory turnover rate of 16,a receivables turnover rate of 21 and a payables turnover rate of 11. How long is the operating cycle?

Cash cycle equals:

Yale Stores had a beginning accounts payable balance of $56,900 and an ending accounts payable balance of $62,800. Sales for the period were $670,000 and costs of goods sold were $418,000. What is the payables turnover rate?

Your firm has sales of $628,000 and cost of goods sold of $402,000. At the beginning of the year,your inventory was $31,000. At the end of the year,the inventory balance was $33,000. What is the inventory turnover rate?

Which of the following changes cash?

Which of the following decreases cash?

A firm has sales of $720,000. The cost of goods sold is equal to 70% of sales. The firm has an average inventory of $6,500. How many days on average does it take the firm to sell its inventory?

Amanda's Interior Design has sales of $462,000,costs of goods sold of $308,000 and average accounts receivable of $48,900. How long does it take its credit customers to pay for their purchases?

A use of cash can be determined by:

Candra's Cameras,Inc. has sales of $642,000 and average accounts payable of $36,400. The cost of goods sold is equivalent to 65% of sales. How long does it take Candra's Cameras to pay its suppliers?