Thrifty CO's cash budget highlights a short-term surplus in the near future.
Which of the following actions would be appropriate to make use of the surplus?
FM CH-13 Working Capital
Quiz
•
Professional Development
•
1st Grade
•
Hard
PFC Education
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16 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 2 pts
Thrifty CO's cash budget highlights a short-term surplus in the near future.
Which of the following actions would be appropriate to make use of the surplus?
Pay suppliers earlier to take advantage Of any prompt payment discounts
Buy back the company's shares
Increase payables by delaying payment to suppliers
Invest in a long term deposit bank account
2.
MULTIPLE CHOICE QUESTION
30 sec • 2 pts
Which of the following might be associated with a shortening working capital cycle?
Lower net operating cash flow
Increasing tax-allowable depreciation expenditure
Slower inventory turnover
Taking longer to pay suppliers
3.
MULTIPLE CHOICE QUESTION
30 sec • 2 pts
The cash cycle is equal to which Of the following?
Accounts receivable collection period plus inventory holding period minus accounts
payable payment period
Inventory holding period minus accounts receivable collection period minus accounts
payable payment
Accounts receivable collection period plus inventory holding period plus accounts
payable payment period
Accounts receivable collection period minus accounts payable payment period minus
inventory holding period
4.
MULTIPLE CHOICE QUESTION
30 sec • 2 pts
A company has annual credit sales of $27 million and related cost of sales of $15 million. The
company has the following targets for the next year:
Accounts receivable collection period 50 days
Inventory holding period 60 days
Accounts payable payment period 45 days
Assume there are 360 days in the year.
What is the net investment in working capital required for the next year?
$4,375,000
$2,875,000
$6,375,000
$8,125,000
5.
MULTIPLE CHOICE QUESTION
30 sec • 2 pts
Which TWO of the following would be key aspects of a company's accounts receivable
credit policy?
Assessing creditworthiness
Checking credit limits once a year
Invoicing promptly and collecting overdue debts
Delaying payments to obtain a 'free' source of finance
6.
MULTIPLE CHOICE QUESTION
30 sec • 2 pts
For a retailer, let
S = Sales
P = purchases
O = Opening inventory
C = Closing inventory
D = Opening receivables
R = Closing receivables
Which of the following is the best expression for the accounts receivable collection period
at the period end?
(D + R]/P x 365
(D + R]/S x 365
R/S x 365
D/S x 365
7.
MULTIPLE CHOICE QUESTION
30 sec • 2 pts
Which of the following is NOT usually associated with overtrading?
An increase in the current ratio
A rapid increase in revenue
A rapid increase in the volume of current assets
Most of the increase in current assets being financed by credit
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