QUESTION 2. QUESTION 3 Which one of the following is most indicative of a flexible short-term financial policy?

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1 QUESTION 1 Compute the cash cycle based on the following information: Average Collection Period = 47 Accounts Payable Period = 40 Average Age of Inventory = 55 QUESTION 2 Jan 41,700 July 39,182 Feb 18,921 Aug 17,281 Mar 17,281 Sep 41,700 Apr 39,182 Oct 17,281 May 41,700 Nov 18,921 June 18,921 Dec 39,182 Sales are collected as follows: In the month of Sales: 20% In the next month: 28% After 2 months: 10% After 3 months: remainder is collected Calculate the cash collection for December. QUESTION 3 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 accounts receivable Relatively high ratio of short-term debt to total debt Relatively low level of liquidity

2 QUESTION 4 Jan 47,489 July 36,085 Feb 34,128 Aug 39,903 Mar 39,903 Sep 47,489 Apr 36,085 Oct 39,903 May 47,489 Nov 34,128 June 34,128 Dec 36,085 Sales are collected as follows: In the month of Sales: 41% In the next month: 30% After 2 months: 6% Remainder is considered as bad debt and is not collected. Calculate the cash collection for June. QUESTION 5 On July 15 th, you purchased $10,000 worth of goods. The terms of the sale were 1/9, 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 6 Compute the Accounts Payable (A/P) period based on the following information: Average A/P balance = $67,660 Annual Cost of Goods Sold = $118,631 Assume 365 days Enter your answer rounded off to two decimal points. For example, if your answer is then enter as in the answer box.

3 QUESTION 7 ABC Company has an average collection period of 41 days and factors all of its receivables immediately at a 3 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 8 ABC Corporation currently has an inventory turnover of 39.74, a payables turnover of 9.13, and a receivables turnover of How many days are in the operating cycle? Enter your answer rounded off to two decimal points. For example, if your answer is then enter as in the answer box. QUESTION 9 Jan 20,740 July 27,944 Feb 42,200 Aug 32,693 Mar 32,693 Sep 20,740 Apr 27,944 Oct 32,693 May 20,740 Nov 42,200 June 42,200 Dec 27,944 Sales are collected as follows: In the month of Sales: 34% In the next month: 23% After 2 months: 9% After 3 months: remainder is collected Calculate the cash collection for November.

4 QUESTION 10 As of this morning, your firm had a ledger balance of $3,854 with no outstanding deposits or checks. Today, your firm deposited 8 checks in the amount of $444 each and wrote 3 checks in the amount of $666 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 $ then enter as in the answer box. QUESTION 11 ABC Company has annual sales of $400,000 and cost of goods sold of $79,161. The accounts payable period is days. What is the average accounts payable balance? Enter your answer rounded off to two decimal points. For example, if your answer is then enter as in the answer box. QUESTION 12 Which of the following is a Source of Cash? Choose only one. Increase in long-term debt Increase in current assets decrease in current liabilities Increase in fixed assets decrease in equity QUESTION 13 The terms of the sale were 3/14, net 51. 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 ABC Company writes 180 checks a day for an average amount of $663 each. These checks generally clear the bank in 3 days. In addition, the firm generally receives an average of $178,948 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm's net float?

5 Do not enter $ or comma in the answer box. For example, if your answer is $ then enter as in the answer box. QUESTION 15 As of this morning, your firm had a ledger balance of $4,885 with no outstanding deposits or checks. Today, your firm deposited 7 checks in the amount of $231 each and wrote a check in the amount of $877. 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 $ then enter as in the answer box. QUESTION 16 ABC Company has a cash cycle of days, an operating cycle of days, and an average collection period of 5 days. The company reported cost of goods sold of $239,688. 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 $ then enter as in the answer box QUESTION 17 Jan 38,325 July 26,993 Feb 45,451 Aug 31,647 Mar 31,647 Sep 38,325 Apr 26,993 Oct 31,647 May 38,325 Nov 45,451 June 45,451 Dec 26,993 The company has estimated expenses as follows: General and administrative expenses: $4,408 Material purchases are 62 percent of sales. Material purchases are paid in the month following the purchase. Interest payment per month: $3,821 Rent expenses per quarter starting March: $6,356 Calculate the cash outflows for June.

6 QUESTION 18 Identify which of the following will increase the operating cycle. Choose only one. Decrease in inventory turnover ratio decrease in days' sales in inventory decrease in average collection period decrease in accounts payable period decrease in accounts payable turnover ratio QUESTION 19 ABC Company has annual sales of $473,747 and cost of goods sold of $198,600. The average accounts receivable balance is $67,433. 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 then enter as in the answer box. QUESTION 20 ABC Corporation currently has an inventory turnover of 24.11, a payables turnover of 12.9, and a receivables turnover of How many days are in the cash cycle? Enter your answer rounded off to two decimal points. For example, if your answer is then enter as in the answer box. QUESTION 21 Identify a source of cash from below. Choose only one. decrease in current liabilities decrease in long-term debt Increase in fixed assets Decrease in accounts receivable increase in inventory

7 QUESTION 22 Indicate the effect of the following on the cash cycle: Accounts payable turnover goes up No change Increase Decrease QUESTION 23 Indicate the effect of the following on the operating cycle: Customers take longer to make the payment No change Decrease Increase QUESTION 24 Indicate the effect of the following on the operating cycle: Accounts payable goes up No change Increase Decrease