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Exam 16: Short-Term Financial Planning

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Question 41

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Moore &Moore has just finished projecting its expected cash receipts and expenditures for next year.What is this projection called?

A) Operating projection
B) Receivables schedule
C) Balance sheet
D) Cash budget
E) Compromise policy.

F) A) and B)
G) A) and C)

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Question 42

Multiple Choice

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Consider the following financial statement information: Assume all sales and purchases are on credit.How long is the cash cycle? (Use average balance sheet account balances.)

A) 80.21 days
B) 116.09 days
C) 101.03 days
D) 113.58 days
E) 73.57 days

F) A) and B)
G) B) and E)

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Question 43

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Bee's Honey currently has an inventory turnover of 28.6,a payables turnover of 10.8,and a receivables turnover of 14.4.How many days are in the cash cycle?

Juno's has projected its Q1 sales at $46,000 and its Q2 sales at $48,000.Purchases equal 71 percent of the next quarter's sales.The accounts receivable period is 30 days and the accounts payable period is 45 days.At the beginning of Q1,the accounts receivable balance is $12,200 and the accounts payable balance is $14,800.The firm pays $1,500 a month in cash expenses and $400 a month in taxes.At the beginning Q1,the cash balance is $280 and the short-term loan balance is zero.The firm maintains a minimum cash balance of $250.Assume each month has 30 days.What is the cumulative cash surplus (deficit) at the end of the Q1,prior to any short-term borrowing?

P&M Industries has projected quarterly sales for the coming year,starting with Quarter 1,of $6,200,$6,500,$6,300,and $6,700,respectively.Sales in the year following this one are projected to be 4 percent greater in each quarter.Assume the company places orders during each quarter equal to 74 percent of projected sales for the next quarter.How much will the firm pay its suppliers in Q3 if the firm has a 30-day payables period?

Northern Beef has estimated quarterly sales for the coming year,starting with Quarter 1,of $680,$725,$740,and $720,respectively.The accounts receivable balance at the beginning of Q1 is $330 and the collection period is 60 days.How much cash will the firm collect in Q1,Q2,and Q3,respectively?

A company has expected sales for January through April of $9,800,$9,500,$13,800,and $9,500,respectively.Assume each month has 30 days and the accounts receivable period is 38 days.How much does the company expect to collect in the month of May?

Holiday Tree Farm has a cash balance of $34 and a short-term loan balance of $180 at the beginning of Q1.The net cash inflow for the first quarter is $36 and for the second quarter there is a net cash outflow of $48.All cash shortfalls are funded with short-term debt.The firm pays 2 percent of its prior quarter's ending loan balance as interest each quarter.The minimum cash balance is $20.What is the short-term loan balance at the end of Q2?

Which one of the following is a graphical representation of the operating and cash cycles?

Which of these is the most indicative of a flexible short-term financial policy?

Which one of the following will increase the operating cycle?

The Lumber Yard has projected sales for April through July of $152,400,$161,800,$189,700,and $196,400,respectively.The firm collects 52 percent of its sales in the month of sale,46 percent in the month following the month of sale,and the remainder in the second month following the month of sale.What is the amount of the July collections?

The length of time a retailer owes its supplier for an inventory purchase is called the:

Ds Hardware's monthly purchases are equal to 72 percent of the following month's sales.The accounts payable period for purchases is 45 days.All other expenses are paid when incurred.Assume each month has 30 days.The company has compiled the following information: $\begin{array} { | l | r | r | r | r | } \hline & \underline { \text { July } } & \underline { \text { August } } & \underline { \text { September } } & \text { October } \\\hline \text { Sales } & \$ 18,500 & \$ 19,200 & \$ 20,400 & \$ 17,800 \\\hline \text { Other expenses } & 1,900 & 2,100 & 1,900 & 1,800 \\\hline \text { Interest and taxes } & 1,000 & 1,100 & 1,200 & 1,000 \\\hline\end{array}$ What is the projected amount of disbursements for the month of September?

Which statement is true?

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

Which statement is true?

BL Motors has sales for the year of $287,400,cost of goods sold equal to 68 percent of sales,and an average inventory of $37,800.The profit margin is 7 percent and the tax rate is 34 percent.How many days on average does it take the firm to sell an inventory item?

Which of these activities is a source of cash?

State Street Market currently has 68days in its cash cycle and 115days in its operating cycle.The firm purchases its entire inventory from one supplier.This supplier has offered a 3 percent discount on all purchases if State Street Market will pay in 10 days.If the market opts to take advantage of the discount offered,its new operating cycle will be _____ days and its new cash cycle will be _____ days.