Question 1

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 2

Which of the following changes cash?

Accepted Answer

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

Question 3

Which of the following increases cash?

Accepted Answer

A decrease in current assets other than cash and an increase in current liabilities both increase cash, as they either free up cash or provide additional cash resources.

Question 4

Which of the following decreases cash?

Accepted Answer

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

Question 5

Weson, Inc.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 for calculating average collection period is:

Average Collection Period = (Accounts Receivable / Total Credit Sales) x Number of Days

Total Credit Sales = Sales - Cash Sales = $462,000 - $0 = $462,000

Average Collection Period = ($48,900 / $462,000) x 365 = 38.63 days

Question 6

Wislon, 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 using the formula:

Cash Cycle = Inventory Conversion Period + Accounts Receivable Period - Accounts Payable Period

Given, 
Inventory turnover rate = 15 times per year 
Inventory Conversion Period = (365 days per year) / (Inventory turnover rate) = 24.33 days

Accounts payable period = 54 days 
Accounts receivable period = 37 days

Substituting the values, we get:

Cash Cycle = 24.33 days + 37 days - 54 days 
Cash Cycle = 7.33 days

Therefore, the length of the cash cycle is 7.33 days. Hence, the correct answer is option E: 7.33 days.

Question 7

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

The answer of Bilt Rite, Inc.has sales of $610,000.The cost...

Question 8

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 9

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 answer of Dallas and More (D&M) sells its inventory...

Question 10

True Blue 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 the cost of goods sold divided by the average accounts payable. The average accounts payable is the sum of the beginning and ending accounts payable balances divided by 2, which is ($56,900 + $62,800) / 2 = $59,850. The payables turnover rate is then $418,000 / $59,850 = 6.98 times.

Question 11

Cash cycle equals:

Accepted Answer

The answer of Cash cycle equals:
...

Question 12

A use of cash can be determined by:

Accepted Answer

A use of cash usually involves a decrease in a liability (choice A) and/or an increase in an asset (choice B). An increase in retained earnings (choice C) is not directly related to a use of cash. Therefore, choices A and B are correct and the best answer is E.

Question 13

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 14

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

First, we need to find the cost of goods sold:

Cost of Goods Sold = 70% × $720,000 = $504,000

Next, we can use the formula for average inventory turnover period:

Inventory Turnover Period = (Average Inventory ÷ Cost of Goods Sold) × 365

Plugging in the numbers, we get:

Inventory Turnover Period = ($6,500 ÷ $504,000) × 365 = 4.71 days

Therefore, the answer is choice B, 4.71 days.

Question 15

LoDo, 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 LoDo to pay its suppliers?

Accepted Answer

The answer of LoDo, Inc.has sales of $642,000 and average...

Question 16

Jaxson 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 calculated as the inventory period plus the accounts receivable period. Initially, it is 33 days (inventory period) + 27 days (accounts receivable period) = 60 days. With the new discount, the accounts receivable period is expected to decline by 13 days, making it 27 - 13 = 14 days. Therefore, the new operating cycle would be 33 days (inventory period) + 14 days (new accounts receivable period) = 47 days.

Question 17

Which of the following increases cash?

Accepted Answer

An increase in equity and an increase in current liabilities both result in an increase in cash, as they provide additional funds to the company.

Question 18

The cash cycle is defined as the time between:

Accepted Answer

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

Question 19

Which of the following decreases cash?

Accepted Answer

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

Question 20

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.

Quiz 26: Short-Term Finance and Planning

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 increases cash?

Which of the following decreases cash?

Weson, Inc.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?

Wislon, 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?

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?

True Blue 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?

Cash cycle equals:

A use of cash can be determined by:

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?

LoDo, 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 LoDo to pay its suppliers?

Which of the following increases cash?

The cash cycle is defined as the time between:

Which of the following decreases cash?

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?