QUESTION 1Indicate the effect of the following on the cash cycle: Accounts payable period goes upDecreaseNo changeIncreaseQUESTION 2Indicate the effect of the following on the operating cycle: Accounts payable goes upDecreaseIncreaseNo changeQUESTION 3Indicate the effect of the following on the cash cycle: Customers take longer to make the paymentIncreaseNo changeDecreaseQUESTION 4MonthSales $MonthSales $Jan42,818July32,470Feb12,167Aug24,601Mar24,601Sep42,818Apr32,470Oct24,601May42,818Nov12,167June12,167Dec32,470Sales are collected as follows:In the month of Sales: 23%In the next month: 33%After 2 months: 12%After 3 months: remainder is collectedCalculate the cash collection for December.QUESTION 5ABC Company has a cash cycle of 11.75 days, an operating cycle of 21.08 days, and an average collection period of 7 days. The company reported cost of goods sold of $235,287. What is the company’s average balance in Accounts Payable?QUESTION 6OnJuly 15th, you purchased $10,000 worth of goods. The terms of the sale were 3/8, net 31. What is the effective annual rate of interest for the credit period for this sale?Enter your answer in percentages rounded off to two decimal points.QUESTION 7As of this morning, your firm had a ledger balance of $3,305 with no outstanding deposits or checks. Today, your firm deposited 9 checks in the amount of $392 each and wrote 13 checks in the amount of $637 each. What is the amount of the disbursement float as of the end of the day?QUESTION 8MonthSales $MonthSales $Jan16,847July23,623Feb26,490Aug47,697Mar47,697Sep16,847Apr23,623Oct47,697May16,847Nov26,490June26,490Dec23,623The company has estimated expenses as follows: General and administrative expenses: $5,788Material purchases are 22 percent of sales. Material purchases are paid in the month following the purchase.Interest payment per month: $3,995Rent expenses per quarter starting March: $2,999Calculate the cash outflows for June.QUESTION 9As of this morning, your firm had a ledger balance of $4,201 with no outstanding deposits or checks. Today, your firm deposited 7 checks in the amount of $494 each and wrote a check in the amount of $976. What is the amount of the collection float as of the end of the day?QUESTION 10Compute the cash cycle based on the following information:Average Collection Period = 34Accounts Payable Period = 44Average Age of Inventory = 42QUESTION 11MonthSales $MonthSales $Jan29,547July28,671Feb15,691Aug16,148Mar16,148Sep29,547Apr28,671Oct16,148May29,547Nov15,691June15,691Dec28,671Sales are collected as follows:In the month of Sales: 41%In the next month: 28%After 2 months: 8%Remainder is considered as bad debt and is not collected.Calculate the cash collection for June.QUESTION 12ABC Company writes 151 checks a day for an average amount of $550 each. These checks generally clear the bank in 2 days. In addition, the firm generally receives an average of $160,774 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm’s net float?QUESTION 13Compute the Accounts Payable (A/P) period based on the following information:Average A/P balance = $53,204Annual Cost of Goods Sold = $218,177Assume 365 daysQUESTION 14Identify which of the following will increase the operating cycle. Choose only one.Decrease in inventory turnover ratiodecrease in accounts payable turnover ratiodecrease in days’ sales in inventorydecrease in accounts payable perioddecrease in average collection periodQUESTION 15ABC Company has annual sales of $473,747 and cost of goods sold of $198,600. The average accounts receivable balance is $67,433. How many days on average does it take the firm to collect its accounts receivable? Assume 365 days.QUESTION 16Which of the following is a Source of Cash? Choose only one.decrease in current liabilitiesIncrease in fixed assetsIncrease in current assetsdecrease in equityIncrease in long-term debtQUESTION 17Identify a source of cash from below. Choose only one.Decrease in accounts receivableIncrease in fixed assetsincrease in inventorydecrease in long-term debtdecrease in current liabilitiesQUESTION 18The terms of the sale were 4/6, net 48. What is the effective annual rate of interest?Enter your answer in percentages rounded off to two decimal points.QUESTION 19Which one of the following is most indicative of a flexible short-term financial policy?Relatively high ratio of short-term debt to total debtRelatively low level of liquidityRelatively high ratio of current assets to total assetsRelatively low level of inventoryRelatively low level of accounts receivableQUESTION 20ABC Corporation currently has an inventory turnover of 28.48, a payables turnover of 8.4, and a receivables turnover of 8.67. How many days are in the cash cycle?Enter your answer rounded off to two decimal points.QUESTION 21ABC Company has an average collection period of 28 days and factors all of its receivables immediately at a 1.3 percent discount. Assume all accounts are collected in full. What is the firm’s effective cost of borrowing?Enter your answer in percentages rounded off to two decimal points.QUESTION 22ABC Corporation currently has an inventory turnover of 21.75, a payables turnover of 11.51, and a receivables turnover of 14.23. How many days are in the operating cycle?QUESTION 23MonthSales $MonthSales $Jan46,126July19,302Feb44,598Aug38,231Mar38,231Sep46,126Apr19,302Oct38,231May46,126Nov44,598June44,598Dec19,302Sales are collected as follows:In the month of Sales: 40%In the next month: 27%After 2 months: 5%After 3 months: remainder is collectedCalculate the cash collection for November.QUESTION 24ABC Company has annual sales of $400,000 and cost of goods sold of $259,091. The accounts payable period is 33.04 days. What is the average accounts payable balance?
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