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54.
The primary difference between a line of credit and a revolving credit arrangement is the:
55.
A compensating balance:
I. is required when a firm acquires any bank financing other than a line of credit.
II. increases the cost of short-term bank financing.
III. may be required even if a firm never borrows funds.
IV. is often used as a means of paying for banking services received.
56.
High Point Hotel (HPH) has $165,000 in accounts receivable. To finance a major purchase,
the company assigns these receivables to Cross Town Bank. Which one of the following
statements correctly describes this transaction?
57.
Which one of the following statements is correct?
58.
Which of the following are benefits derived from short-term financial planning?
I. having advance notice of when your firm will require external financing
II. being able to determine the extent of time for which a loan is required
III. having the ability to time capital expenditures in order to place the least financial
burden possible on a firm
IV. knowing for certain what your cash balance will be six months in advance
59.
Denver Interiors, Inc., has sales of $836,000 and cost of goods sold of $601,000. The firm
had a beginning inventory of $36,000 and an ending inventory of $47,000. What is the
length of the inventory period?
60.
A national firm has sales of $729,000 and cost of goods sold of $478,000. At the beginning
of the year, the inventory was $37,000. At the end of the year, the inventory balance was
$41,000. What is the inventory turnover rate?
61.
North Side Wholesalers has sales of $948,000. The cost of goods sold is equal to 68
percent of sales. The firm has an average inventory of $23,000. How many days on
average does it take the firm to sell its inventory?
62.
The Bear Rug has sales of $811,000. The cost of goods sold is equal to 63 percent of
sales. The beginning accounts receivable balance is $41,000 and the ending accounts
receivable balance is $38,000. How long on average does it take the firm to collect its
receivables?
63.
The Blue Star has sales of $387,000, costs of goods sold of $259,000, average accounts
receivable of $12,100, and average accounts payable of $12,600. How long does it take for
the firm's credit customers to pay for their purchases?
64.
The Mountain Top Shoppe has sales of $512,000, average accounts receivable of $31,400
and average accounts payable of $24,800. The cost of goods sold is equivalent to 71
percent of sales. How long does it take The Mountain Top Shoppe to pay its suppliers?
65.
HG Livery Supply had a beginning accounts payable balance of $57,300 and an ending
accounts payable balance of $55,100. Sales for the period were $610,000 and costs of
goods sold were $458,000. What is the payables turnover rate?
66.
Your firm has an inventory turnover rate of 14, a payables turnover rate of 8, and a
receivables turnover rate of 19. How long is your firm's operating cycle?
67.
Merryl Enterprises currently has an operating cycle of 59 days. The firm is analyzing some
operational changes, which are expected to increase the accounts receivable period by 2
days and decrease the inventory period by 5 days. The accounts payable turnover rate is
expected to increase from 42 to 46 times per year. If all of these changes are adopted,
what will the firm's new operating cycle be?
68.
On average, Furniture & More is able to sell its inventory in 27 days. The firm takes 87
days on average to pay for its purchases. On the other hand, its average customer pays
with a credit card which allows the firm to collect its receivables in 4 days. Given this
information, what is the length of operating cycle?
69.
Interior Designs has an inventory period of 51 days, an accounts payable period of 38
days, and an accounts receivable period of 32 days. Management is considering an offer
from their suppliers to pay within 10 days and receive a 2 percent discount. If the new
discount is taken, the accounts payable period is expected to decline by 26 days. If the
new discount is taken, the operating cycle will be _____ days.
70.
Metal Products Co. has an inventory period of 53 days, an accounts payable period of 68
days, and an accounts receivable turnover rate of 18. What is the length of the cash
cycle?
71.
West Chester Automation has an inventory turnover of 17.5 and an accounts payable
turnover of 11. The accounts receivable period is 36 days. What is the length of the cash
cycle?
72.
Peterson's Antiquities currently has a 31 day cash cycle. Assume the firm changes its
operations such that it decreases its receivables period by 2 days, decreases its inventory
period by 3 days, and decreases its payables period by 4 days. What will the length of the
cash cycle be after these changes?
73.
A company currently has a 51 day cash cycle. Assume the firm changes its operations
such that it decreases its receivables period by 2 days, increases its inventory period by 3
days, and increases its payables period by 4 days. What will the length of the cash cycle
be after these changes?
