QUESTION 1 ABC Company has annual sales of $449,521 and cost of goods sold of $198,600. The average accounts receivable balance is $106,932. 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 2 Identify which of the following will increase the operating cycle. Choose only one. • • • • • decrease in average collection period decrease in accounts payable period Decrease in inventory turnover ratio decrease in accounts payable turnover ratio decrease in days' sales in inventory QUESTION 3 Month Sales $ Month Sales $ Jan 13,341 July 31,082 Feb 28,624 Aug 13,521 Mar 13,521 Sep 13,341 Apr 31,082 Oct 13,521 May 13,341 Nov 28,624 June 28,624 Dec 31,082 The company has estimated expenses as follows: General and administrative expenses: $2,412 Material purchases are 36 percent of sales. Material purchases are paid in the month following the purchase. Interest payment per month: $3,275 Rent expenses per quarter starting March: $4,859 Calculate the cash outflows for June. 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 4 ABC Company has a cash cycle of 10.11 days, an operating cycle of 22.16 days, and an average collection period of 7 days. The company reported cost of goods sold of $273,071. 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 5 Identify a source of cash from below. Choose only one. • • • • • increase in inventory decrease in long-term debt decrease in current liabilities Increase in fixed assets Decrease in accounts receivable QUESTION 6 ABC Company writes 331 checks a day for an average amount of $591 each. These checks generally clear the bank in 3 days. In addition, the firm generally receives an average of $170,481 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 7 As of this morning, your firm had a ledger balance of $4,911 with no outstanding deposits or checks. Today, your firm deposited 4 checks in the amount of $381 each and wrote a check in the amount of $817. 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 8 ABC Company has an average collection period of 34 days and factors all of its receivables immediately at a 3.1 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 9 Which one of the following is most indicative of a flexible short-term financial policy? • • • • • Relatively high ratio of current assets to total assets Relatively low level of inventory Relatively low level of liquidity Relatively high ratio of short-term debt to total debt Relatively low level of accounts receivable QUESTION 10 Month Sales $ Month Sales $ Jan 15,046 July 30,778 Feb 32,975 Aug 22,230 Mar 22,230 Sep 15,046 Apr 30,778 Oct 22,230 May 15,046 Nov 32,975 June 32,975 Dec 30,778 Sales are collected as follows: In the month of Sales: 32% In the next month: 27% After 2 months: 5% Remainder is considered as bad debt and is not collected. Calculate the cash collection for June. 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 11 The terms of the sale were 3/8, net 43. 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 12 Month Sales $ Month Sales $ Jan 42,175 July 14,603 Feb 19,251 Aug 34,663 Mar 34,663 Sep 42,175 Apr 14,603 Oct 34,663 May 42,175 Nov 19,251 June 19,251 Dec 14,603 Sales are collected as follows: In the month of Sales: 25% In the next month: 34% After 2 months: 11% After 3 months: remainder is collected Calculate the cash collection for December. 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 13 ABC Corporation currently has an inventory turnover of 19.73, a payables turnover of 8.84, and a receivables turnover of 9.12. 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 14 As of this morning, your firm had a ledger balance of $4,294 with no outstanding deposits or checks. Today, your firm deposited 6 checks in the amount of $146 each and wrote 11 checks in the amount of $880 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 15 Compute the cash cycle based on the following information: Average Collection Period = 34 Accounts Payable Period = 28 Average Age of Inventory = 32 QUESTION 16 ABC Corporation currently has an inventory turnover of 23.46, a payables turnover of 16.61, and a receivables turnover of 17.87. 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 17 Compute the Accounts Payable (A/P) period based on the following information: Average A/P balance = $53,204 Annual Cost of Goods Sold = $218,177 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 18 ABC Company has annual sales of $400,000 and cost of goods sold of $145,063. The accounts payable period is 55.47 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 19 On July 15th, you purchased $10,000 worth of goods. The terms of the sale were 2/7, net 46. 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 20 Month Sales $ Month Sales $ Jan 30,690 July 23,509 Feb 17,674 Aug 11,294 Mar 11,294 Sep 30,690 Apr 23,509 Oct 11,294 May 30,690 Nov 17,674 June 17,674 Dec 23,509 Sales are collected as follows: In the month of Sales: 32% In the next month: 23% After 2 months: 7% After 3 months: remainder is collected Calculate the cash collection for November. 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 Which of the following is a Source of Cash? Choose only one. • • • • • Increase in current assets decrease in equity Increase in long-term debt decrease in current liabilities Increase in fixed assets QUESTION 22 Indicate the effect of the following on the cash cycle: Accounts payable turnover goes up • • • Decrease No change Increase QUESTION 23 Indicate the effect of the following on the operating cycle: Customers take longer to make the payment • • • Decrease Increase No change QUESTION 24 Indicate the effect of the following on the cash cycle: Accounts payable period goes up • • • Increase No change Decrease
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