47) Super Mart has sales of $542,300. The cost of goods sold is equal to 59 percent of sales. The
beginning accounts receivable balance is $86,534, and the ending accounts receivable balance is
$84,209. How long on average does it take the firm to collect its receivables?
A) 57.46 days
B) 66.08 days
C) 39.19 days
D) 43.92 days
E) 49.11 days
48) Blackwell Co. has credit sales of $317,428, costs of goods sold of $151,217, and average
accounts receivable of $28,744. How long on average does it take the firm’s credit customers to
pay for their purchases?
A) 27.99 days
B) 33.05 days
C) 38.23 days
D) 31.37 days
E) 29.95 days
49) The Down Towner has sales of $748,320 and average accounts payable of $128,209. The cost
of goods sold is equivalent to 62 percent of sales. How long does it take the company to pay its
suppliers?
A) 74.07 days
B) 93.45 days
C) 79.69 days
D) 100.86 days
E) 89.85 days
50) True Blue Stores had a beginning accounts payable balance of $87,300 and an ending accounts
payable balance of $79,460. Sales for the period were $702,000, and costs of goods sold were
$423,600. What is the payables turnover rate?
A) 6.98 times
B) 5.08 times
C) 8.23 times
D) 9.28 times
E) 7.01 times
51) A firm has an inventory turnover rate of 15.2, a receivables turnover rate of 16.8, and a
payables turnover rate of 12.7. How long is the operating cycle?
A) 39.19 days
B) 45.74 days
C) 42.87 days
D) 33.08 days
E) 53.37 days
52) Bruceton Farms currently has an operating cycle of 76.3 days. The firm is analyzing some
operational changes that are expected to decrease the accounts receivable period by 2.8 days and
decrease the inventory period by 3.1 days. The accounts payable turnover rate is expected to
increase from seven to eight times per year. If all of these changes are adopted, what will be the
firm’s new operating cycle?
A) 68.7 days
B) 61.3 days
C) 54.9 days
D) 70.4 days
E) 76.2 days
53) D&M sells its inventory in 67 days on average. Their customers generally charge their
purchases on a credit card with payment being received in 2 days. The company takes 61 days on
average to pay for its purchases. Given this information, what is the length of the company’s cash
cycle?
A) 42 days
B) 36 days
C) 13 days
D) 17 days
E) 8 days
54) Smiley and Sons has an inventory period of 42 days, an accounts payable period of 33 days,
and an accounts receivable period of 38 days. Management is considering offering a 2 percent
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 19 days. If the new discount is
offered, the cash cycle will change from ________ days to ________ days.
A) 47; 28
B) 80; 61
C) 80; 28
D) 61; 47
E) 61; 28
55) Candy Corner has an inventory turnover rate of 14.6, an accounts payable period of 43.7 days,
and an accounts receivable period of 32.4 days. What is the length of the cash cycle?
A) 14.2 days
B) 11.8 days
C) 12.1 days
D) 17.3 days
E) 13.7 days
56) Dwyer Metals has an inventory turnover of 16 and an accounts receivable turnover of 10. The
accounts payable period is 51 days. What is the length of the operating cycle?
A) 59.31 days
B) 62.57 days
C) 51.84 days
D) 65.03 days
E) 52.79 days
57) A firm currently has a 29.3-day cash cycle. Assume the firm changes its operations such that it
decreases its receivables period by 2.7 days, increases its inventory period by 1.4 days, and
decreases its payables period by 2.4 days. What will the length of the cash cycle be after these
changes?
A) 32.5 days
B) 33.2 days
C) 35.6 days
D) 30.4 days
E) 39.1 days
58) Martinique’s Boutique has a 45-day collection period. Sales for the next four quarters are
estimated at $1,500, $1,600, $2,100, and $1,900, respectively, starting with the first quarter of the
year. Given this information, which one of the following statements is correct? Assume a 360-day
year.
A) The firm will collect $1,575 in Quarter 2.
B) The accounts receivable balance at the beginning of Quarter 4 will be $950.
C) The firm will collect $750 from Quarter 2 sales in Quarter 3.
D) The firm will have an accounts receivable balance of $950 at the end of the year.
E) The firm will collect a total of $2,100 in Quarter 4.
59) HM Industries has a beginning receivables balance on January 1st of $484. Sales for January
through April are $420, $364, $390, and $433, respectively. The accounts receivable period is 60
days. How much did the firm collect in the month of April? Assume a 360-day year.
A) $420
B) $364
C) $377
D) $390
E) $392
60) Smith and Johnson have expected sales of $427, $489, $626, and $738 for the months of
January through April, respectively. The accounts receivable period is 15 days. How much did the
firm collect in the month of April? Assume a 360-day year.
A) $626
B) $558
C) $738
D) $313
E) $682
61) Duke’s Auto Parts has a beginning receivables balance on January 1st of $398. Quarterly sales
for the year are $427, $502, $479, and $525, starting with the first quarter. The accounts receivable
period is 60 days. How much did the firm collect in the second quarter? Assume a 360-day year.
A) $458.50
B) $452.00
C) $477.00
D) $464.50
E) $479.50
62) Baker Industries has a 30-day accounts receivable period. The estimated quarterly sales for this
year, starting with the first quarter, are $1,450, $1,620, $1,740, and $2,250, respectively. How
much does the firm expect to collect in the fourth quarter? Assume a 360-day year.
A) $2,010
B) $1,980
C) $2,080
D) $1,960
E) $2,120
63) Dewey’s expects sales of $780, $830, $870, and $790 for the months of April through July,
respectively. The firm collects 31 percent of sales in the month of sale, 63 percent in the month
following the month of sale, and 5 percent in the second month following the month of sale. The
remaining 1 percent of sales is never collected. How much money does the firm expect to collect in
the month of June?
A) $831.60
B) $801.40
C) $808.20
D) $788.20
E) $852.40
64) Weisbro and Sons purchases its inventory one quarter prior to the quarter of sale. The purchase
price is 57 percent of the sales price. The accounts payable period is 60 days. The accounts payable
balance at the beginning of Quarter 1 is $27,500. Sales for Quarters 1 through 4 are expected to be
$46,400, $51,900, $57,800, and $62,500, respectively. What is the amount of the expected
disbursements for Quarter 3? Assume a 360-day year.
A) $29,202
B) $30,451
C) $33,839
D) $28,800
E) $31,407
65) Birds Unlimited has a 45-day accounts payable period. The firm has expected sales for
Quarters 1 through 4 of next year of $2,240, $2,650, $2,820, and $2,700, respectively. The cost of
goods sold for a quarter is equal to 58 percent of the next quarter’s sales. What is the amount of the
projected cash disbursements for accounts payable for Quarter 3? Assume a 360-day year.
A) $2,825.50
B) $1,600.80
C) $1,690.30
D) $1,725.50
E) $2,760.00
66) As of the beginning of the quarter, a firm has a cash balance of $318. During the quarter, the
firm pays its suppliers $297 and collects $398 from customers. It also pays an interest payment of
$32 and a tax bill of $164. In addition, the firm borrows $125. What is the cash balance at the end
of the quarter?
A) $98
B) $145
C) $253
D) $348
E) $305
67) On April 1st, a firm had a beginning cash balance of $239. March sales were $474 and April
sales were $463. During April, the firm had cash expenses of $135 and payments on accounts
payable of $212. The accounts receivable period is 30 days. What is the firm’s beginning cash
balance on May 1st? Assume a 360-day year.
A) $397
B) $366
C) $419
D) $382
E) $355
68) Jupiter stores had a Quarter 2 beginning cash balance of $647. Sales for Quarters 1 through 3
are estimated at $800, $950, and $1,200, respectively. The cost of goods sold is equal to 59 percent
of sales. Goods are purchased one quarter prior to the month of sale. The accounts payable period
is 30 days, and the accounts receivable period is 15 days. The firm had quarterly cash expenses of
$210. What was the cash balance at the end of Quarter 2? Assume a 360-day year.
A) $674.47
B) $666.67
C) $703.17
D) $719.39
E) $680.00
69) Smithfield’s has a line of credit with a local bank of $75,000. The loan agreement calls for
interest of 6 percent with a compensating balance requirement of 3 percent that is based on the
total amount borrowed. What is the effective interest rate if the firm needs $58,000 for 1 year to
finance a fixed asset purchase?
A) 8.55%
B) 6.34%
C) 7.13%
D) 7.38%
E) 6.19%
70) The Babco Co. has a $225,000 line of credit with an interest rate of 6.5 percent and a
compensating balance requirement of 4 percent that is based on the total amount borrowed. What
is the effective interest rate if the firm needs $163,000 to finance some expenses? The company
plans on repaying the loan in a lump sum at the end of 1 year.
A) 7.20%
B) 7.27%
C) 7.08%
D) 5.80%
E) 6.77%
71) Upstate Farms factors its accounts receivable immediately at a discount of 2.5 percent. The
average collection period is 39 days. Assume all accounts are collected in full. What is the
effective annual interest rate on this arrangement? Assume a 365-day year.
A) 29.97%
B) 26.74 %
C) 30.78%
D) 27.90%
E) 28.33%
72) Prudoe Fuels factors its accounts receivable immediately at a discount of 1.65 percent. The
average collection period is 43 days. Assume all accounts are collected in full. What is the
effective annual interest rate on this arrangement? Assume a 365-day year.
A) 14.97%
B) 15.17 %
C) 16.09%
D) 16.67%
E) 18.51%
73) A supplier offers you credit terms of 1/5, net 20. What is the cost of forgoing the discount on a
purchase of $1,250? Assume a 365-day year.
A) 34.21%
B) 37.79%
C) 29.03%
D) 32.33%
E) 44.32%
74) A supplier offers you credit terms of 2/10, net 45. What is the cost of forgoing the discount on
a purchase of $318,600? Assume a 365-day year.
A) 20.41%
B) 21.08%
C) 24.83%
D) 22.69%
E) 23.45%
75) Dixie’s has a net cash inflow for the quarter of –$108. The beginning cash balance is $212.
Company policy is to maintain a minimum cash balance of $75 and borrow only the amount that is
necessary to maintain that balance. How much does the firm need to borrow to have a zero
cumulative surplus?
A) $0
B) $104
C) $179
D) $132
E) $29
76) Toni’s has a net cash inflow, excluding long-term financing expenses, for the quarter of
$418.02. The beginning cash balance is $187.40. The firm has $546 in short-term debt with a
quarterly interest rate of 1.2 percent. New company policy is to maintain a minimum cash balance
of $140. How much does the firm need to borrow or how much can it repay on its loan to have a
zero cumulative surplus for the quarter?
A) Borrow $458.87
B) Borrow $276.69
C) Repay $465.42
D) Repay $458.87
E) Repay $308.19
77) Midwest Meats has a net cash inflow, excluding long-term financing expenses, for the quarter
of $248. The minimum and beginning cash balance is $300, and the firm has $2,300 in short-term
debt. The quarterly interest on the loan is $37. How much does the firm need to borrow or how
much can it repay on its loans to have a zero cumulative surplus for the quarter?
A) Repay $89
B) Borrow and repay $0
C) Repay $211
D) Borrow $89
E) Repay $164
78) Buster’s had a beginning cash balance of $2,780 for the quarter. During the quarter, the firm
had cash collections of $41,309, wages and other cash expenses of $18,800, payments on account
of $21,308, and dividends paid of $1,200. The beginning short-term debt is $6,800 with a quarterly
interest rate of 2 percent. The firm just adopted a new policy which sets the minimum cash balance
at $600. At quarter end, the cumulative surplus (deficit) is ________ and the ending short-term
debt is ________.
A) $0; $6,800
B) $0; $4,755
C) $0; $4,891
D) $1,892; $4,891
E) $2,045; $4,755
79) Snow Mountain Resort had a beginning cash balance of $9,720 for the quarter. During the
quarter, the firm had cash collections of $157,311, wages and other cash expenses of $67,900,
payments on account of $57,412, and dividends paid of $2,500. The minimum cash balance was
just set at $1,200. The beginning short-term debt is $28,000 with a quarterly interest rate of 1.4
percent. At quarter end, the cumulative surplus (deficit) is ________ and the ending short-term
debt is ________.
A) $0; $0
B) $0; $1,892
C) $0; $9,627
D) $1,892; $0
E) $9,627; $0