Question 1

The Hot Potato Co.operates several mobile units which contract with construction companies to provide hot food and beverages to their workers.The company has annual sales of $167 200.Cost of goods sold average 45 per cent of sales and the profit margin is 6 per cent.The average accounts receivable balance is $23 400.On average,how long does it take Hot Potato to collect from its construction customers?

Accepted Answer

A)  56 days
B)  61 days
C)  48 days
D)  59 days
E)  51 daysF) None of the above
G) B) and C)

Question 2

Which one of the following actions is indicative of a restrictive short-term financial policy?

Accepted Answer

A)  expanding the number of inventory items carried
B)  minimising the cash balances held by the firm
C)  granting increasing amounts of credit to customers
D)  investing relatively large amounts in marketable securities
E)  increasing the firm's investment in the current accountsF) A) and C)
G) C) and D)

Question 3

The time between the payment for inventory and the receipt of cash from the sale of that inventory is called the:

Accepted Answer

A)  accounts payable period
B)  inventory period
C)  accounts receivable period
D)  cash cycle
E)  operating cycleF) A) and B)
G) All of the above

Question 4

Which one of the following is a use of cash?

Accepted Answer

A)  increasing accounts payable
B)  issuing new shares of stock
C)  decreasing inventory
D)  decreasing fixed assts
E)  increasing accounts receivableF) A) and C)
G) A) and E)

Question 5

Gilbert and Sons has sales for the year of $24 800 and cost of goods sold of $14 200.The firm carries an average inventory of $3100 and an average accounts payable balance of $2400.What is the inventory period?

Accepted Answer

A)  80 days
B)  85 days
C)  75 days
D)  78 days
E)  83 daysF) A) and B)
G) A) and C)

Question 6

Accounts receivable financing is the term used to describe which of the following types of loans which involve either the assignment or the factoring of a firm's accounts receivables?

Accepted Answer

A)  unsecured short-term loan
B)  secured long-term loan
C)  bailment financing
D)  unsecured long-term loan
E)  secured short-term loanF) A) and D)
G) B) and D)

Question 7

Bluewater,Inc.has the following estimated quarterly sales for next year.The accounts receivable period is 60 days.What is the expected accounts receivable balance at the end of the third quarter? Assume that each month has 30 days.
Sales

Accepted Answer

A)  $367
B)  $733
C)  $867
D)  $800
E)  $433F) A) and D)
G) A) and B)

Question 8

Manly Manufacturing Pty Ltd is compiling a cash balance projection by quarter for next year.Which one of the following adjustments to this projection will decrease the cumulative surplus?

Accepted Answer

A)  increasing the dividend per share on the firm's outstanding ordinary shares
B)  decreasing the accounts receivable period by changing the firm's credit policy effective the first of next year
C)  reducing payroll costs from its current projection amount
D)  receiving more favourable credit terms from the firm's suppliers
E)  refinancing the firm's long-term debt at a lower interest rateF) None of the above
G) B) and E)

Question 9

Which type of financing is generally used by new car dealers to finance their inventories?

Accepted Answer

A)  trade credit financing
B)  blanket inventory lien arrangement
C)  committed line of credit
D)  bailment financing
E)  field warehousing financingF) C) and E)
G) None of the above

Question 10

Which of the following costs will tend to increase if a firm switches from a flexible short-term policy to a restrictive short-term financial policy?
I.lost sales due to out-of-stock items
II.inventory warehousing costs
III.cash-outs
IV.total annual order costs

Accepted Answer

A)  I,II and IV only
B)  II and IV only
C)  I and III only
D)  I,III and IV only
E)  I,II,III and IVF) All of the above
G) None of the above

Exam 16: Short-Term Financial Planning

Which one of the following actions is indicative of a restrictive short-term financial policy?

Correct Answer
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Which type of financing is generally used by new car dealers to finance their inventories?

Correct Answer
verified

Gilbert and Sons has sales for the year of $24 800 and cost of goods sold of $14 200.The firm carries an average inventory of $3100 and an average accounts payable balance of $2400.What is the inventory period?

Correct Answer
verified

Which of the following costs will tend to increase if a firm switches from a flexible short-term policy to a restrictive short-term financial policy? I.lost sales due to out-of-stock items II.inventory warehousing costs III.cash-outs IV.total annual order costs

Correct Answer
verified

Bluewater,Inc.has the following estimated quarterly sales for next year.The accounts receivable period is 60 days.What is the expected accounts receivable balance at the end of the third quarter? Assume that each month has 30 days. Sales

Correct Answer
verified

The time between the payment for inventory and the receipt of cash from the sale of that inventory is called the:

Correct Answer
verified

Manly Manufacturing Pty Ltd is compiling a cash balance projection by quarter for next year.Which one of the following adjustments to this projection will decrease the cumulative surplus?

Correct Answer
verified

Accounts receivable financing is the term used to describe which of the following types of loans which involve either the assignment or the factoring of a firm's accounts receivables?

Correct Answer
verified

Correct Answer
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Which one of the following is a use of cash?

Correct Answer
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Exam 16: Short-Term Financial Planning

Which one of the following actions is indicative of a restrictive short-term financial policy?

Correct AnswerverifiedShow Answer

Which type of financing is generally used by new car dealers to finance their inventories?

Correct AnswerverifiedShow Answer

Gilbert and Sons has sales for the year of $24 800 and cost of goods sold of $14 200.The firm carries an average inventory of $3100 and an average accounts payable balance of $2400.What is the inventory period?

Correct AnswerverifiedShow Answer

Which of the following costs will tend to increase if a firm switches from a flexible short-term policy to a restrictive short-term financial policy? I.lost sales due to out-of-stock items II.inventory warehousing costs III.cash-outs IV.total annual order costs

Correct AnswerverifiedShow Answer

Bluewater,Inc.has the following estimated quarterly sales for next year.The accounts receivable period is 60 days.What is the expected accounts receivable balance at the end of the third quarter? Assume that each month has 30 days. Sales

Correct AnswerverifiedShow Answer

The time between the payment for inventory and the receipt of cash from the sale of that inventory is called the:

Correct AnswerverifiedShow Answer

Manly Manufacturing Pty Ltd is compiling a cash balance projection by quarter for next year.Which one of the following adjustments to this projection will decrease the cumulative surplus?

Correct AnswerverifiedShow Answer

Accounts receivable financing is the term used to describe which of the following types of loans which involve either the assignment or the factoring of a firm's accounts receivables?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is a use of cash?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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