Assume all accounts are collected in full. What is the firm’s effective cost of borrowing?

  1. ABC Company has an average collection period of 25 days and factors all of its receivables immediately at a 2.5 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. Do not enter % in the answer box.

QUESTION 2

  1. Month Sales $ Month Sales $

Jan 35,777 July 41,605

Feb 21,248 Aug 18,333

Mar 18333 Sep 35,777

Apr 41605 Oct 18,333

May 35777 Nov 21,248

June 21,248.00 Dec 41,605

  1. Sales are collected as follows:
  2. In the month of Sales: 34%

In the next month: 28%

After 2 months: 9%

Remainder is considered as bad debt and is not collected.

  1. Calculate the cash collection for June.
  2. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 3

  1. ABC Company has annual sales of $477,105 and cost of goods sold of $198,600. The average accounts receivable balance is $96,051. How many days on average does it take the firm to collect its accounts receivable? Assume 365 days.

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box

QUESTION 4

  1. On July 15th, you purchased $10,000 worth of goods. The terms of the sale were 1/8, net 49. 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. Do not enter % in the answer box.

QUESTION 5

  1. Month Sales $ Month Sales $

Jan 31,703 July 44,071

Feb 42,936 Aug 24,706

Mar 24,706 Sep 31,703

Apr 44,071 Oct 24,706

May 31,703 Nov 42,936

June 42,936 Dec 44,071

  1. Sales are collected as follows:
  2. In the month of Sales: 20%

In the next month: 23%

After 2 months: 9%

After 3 months: remainder is collected

  1. Calculate the cash collection for November.
  2. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 6

  1. Which one of the following is most indicative of a flexible short-term financial policy?

Relatively low level of liquidity

Relatively high ratio of current assets to total assets

Relatively low level of accounts receivable

Relatively low level of inventory

Relatively high ratio of short-term debt to total debt

QUESTION 7

  1. Compute the cash cycle based on the following information:

Average Collection Period = 53

Accounts Payable Period = 31

Average Age of Inventory = 70

QUESTION 8

  1. ABC Company has annual sales of $400,000 and cost of goods sold of $197,844. The accounts payable period is 30.28 days. What is the average accounts payable balance?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

QUESTION 9

  1. ABC Corporation currently has an inventory turnover of 9.54, a payables turnover of 10.26, and a receivables turnover of 12.65. How many days are in the cash cycle?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

QUESTION 10

  1. ABC Corporation currently has an inventory turnover of 43.84, a payables turnover of 8.08, and a receivables turnover of 8.22. How many days are in the operating cycle?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

QUESTION 11

  1. Identify a source of cash from below. Choose only one. increase in inventory Decrease in accounts receivable decrease in current liabilities Increase in fixed assets decrease in long-term debt

QUESTION 12

ABC Company writes 317 checks a day for an average amount of $438 each. These checks generally clear the bank in 5 days. In addition, the firm generally receives an average of $150,094 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm’s net float?

Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box

QUESTION 13

The terms of the sale were 3/12, net 34. What is the effective annual rate of interest?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 14

Compute the Accounts Payable (A/P) period based on the following information:

Average A/P balance = $55,482

Annual Cost of Goods Sold = $183,782

Assume 365 days

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box

QUESTION 15

Which of the following is a Source of Cash? Choose only one.

decrease in equity

decrease in current liabilities

Increase in fixed assets

Increase in current assets

Increase in long-term debt

QUESTION 16

  1. Month Sales $ Month Sales $

Jan 20,912 July 48,141

Feb 31,433 Aug 22,614

Mar 22,614 Sep 20,912

Apr 48,141 Oct 22,614

May 20,912 Nov 31,433

June 31,433 Dec 48,141

  1. Sales are collected as follows:
  2. In the month of Sales: 28%

In the next month: 32%

After 2 months: 10%

After 3 months: remainder is collected

  1. Calculate the cash collection for December.
  2. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 17

Identify which of the following will increase the operating cycle. Choose only one.

decrease in accounts payable turnover ratio

Decrease in inventory turnover ratio

decrease in accounts payable period

decrease in days’ sales in inventory

decrease in average collection period

QUESTION 18

As 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?

Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 19

As of this morning, your firm had a ledger balance of $3,237 with no outstanding deposits or checks. Today, your firm deposited 3 checks in the amount of $496 each and wrote a check in the amount of $645. What is the amount of the collection float as of the end of the day?

Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 20

  1. Month Sales $ Month Sales $

Jan 34,925 July 19,774

Feb 16,394 Aug 36,030

Mar 36,030 Sep 34,925

Apr 19,774 Oct 36,030

May 34,925 Nov 16,394

June 16,394 Dec 19,774

  1. The company has estimated expenses as follows:

General and administrative expenses: $5,145

Material purchases are 67 percent of sales. Material purchases are paid in the month following the purchase.

Interest payment per month: $3,766

Rent expenses per quarter starting March: $2,624

  1. Calculate the cash outflows for June.
  2. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 21

ABC Company has a cash cycle of 10.43 days, an operating cycle of 21.48 days, and an average collection period of 6 days. The company reported cost of goods sold of $293,104. What is the company’s average balance in Accounts Payable?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box

QUESTION 22

Indicate the effect of the following on the cash cycle: Customers take longer to make the payment

No change

Decrease

Increase

QUESTION 23

Indicate the effect of the following on the cash cycle: Accounts payable turnover goes up

Decrease

Increase

No change

QUESTION 24

Indicate the effect of the following on the cash cycle: Accounts payable period goes up

No change

Decrease

Increase

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