1.      ABC Company has an average collection period of 25 days and factors all of its receivables immediately at a 2.5 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 2
1.
Month Sales \$  Month Sales \$
Jan         35,777  July         41,605
Feb         21,248  Aug         18,333
Mar 18333  Sep         35,777
Apr 41605  Oct         18,333
May 35777  Nov         21,248
June  21,248.00   Dec         41,605
2.

3.      Sales are collected as follows:
4.      In the month of Sales: 34%
In the next month: 28%
After 2 months: 9%
Remainder is considered as bad debt and is not collected.
5.      Calculate the cash collection for June.
6.      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 3
1.      ABC Company has annual sales of \$477,105 and cost of goods sold of \$198,600. The average accounts receivable balance is \$96,051. How many days on average does it take the firm to collect its accounts receivable? Assume 365 days.

QUESTION 4
1.      On July 15th, you purchased \$10,000 worth of goods. The terms of the sale were 1/8, net 49. 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 5
1.
Month Sales \$  Month Sales \$
Jan         31,703  July         44,071
Feb         42,936  Aug  24,706
Mar         24,706  Sep  31,703
Apr         44,071  Oct  24,706
May         31,703  Nov  42,936
June         42,936  Dec         44,071
2.

3.      Sales are collected as follows:
4.      In the month of Sales: 20%
In the next month: 23%
After 2 months: 9%
After 3 months: remainder is collected
5.      Calculate the cash collection for November.
6.      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 6
1.      Which one of the following is most indicative of a flexible short-term financial policy?
Relatively low level of liquidity
Relatively high ratio of current assets to total assets
Relatively low level of accounts receivable
Relatively low level of inventory
Relatively high ratio of short-term debt to total debt
QUESTION 7
1.      Compute the cash cycle based on the following information:
Average Collection Period = 53
Accounts Payable Period = 31
Average Age of Inventory = 70

QUESTION 8
1.      ABC Company has annual sales of \$400,000 and cost of goods sold of \$197,844. The accounts payable period is 30.28 days. What is the average accounts payable balance?

QUESTION 9
1.      ABC Corporation currently has an inventory turnover of 9.54, a payables turnover of 10.26, and a receivables turnover of 12.65. How many days are in the cash cycle?

QUESTION 10
1.      ABC Corporation currently has an inventory turnover of 43.84, a payables turnover of 8.08, and a receivables turnover of 8.22. How many days are in the operating cycle?

QUESTION 11
1.      Identify a source of cash from below. Choose only one.
increase in inventory
Decrease in accounts receivable
decrease in current liabilities
Increase in fixed assets
decrease in long-term debt

QUESTION 12
ABC Company writes 317 checks a day for an average amount of \$438 each. These checks generally clear the bank in 5 days. In addition, the firm generally receives an average of \$150,094 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 13
The terms of the sale were 3/12, net 34. 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
Compute the Accounts Payable (A/P) period based on the following information:
Average A/P balance = \$55,482
Annual Cost of Goods Sold = \$183,782
Assume 365 days
QUESTION 15
Which of the following is a Source of Cash? Choose only one.
decrease in equity
decrease in current liabilities
Increase in fixed assets
Increase in current assets
Increase in long-term debt

QUESTION 16
1.
Month Sales \$ Month Sales \$
Jan          20,912  July          48,141
Feb          31,433  Aug          22,614
Mar          22,614  Sep  20,912
Apr          48,141  Oct  22,614
May          20,912  Nov 31,433
June          31,433  Dec 48,141
2.
Sales are collected as follows:
3.      In the month of Sales: 28%
In the next month: 32%
After 2 months: 10%
After 3 months: remainder is collected
4.      Calculate the cash collection for December.
5.      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 17
Identify which of the following will increase the operating cycle. Choose only one.
decrease in accounts payable turnover ratio
Decrease in inventory turnover ratio
decrease in accounts payable period
decrease in days' sales in inventory
decrease in average collection period

QUESTION 18
As of this morning, your firm had a ledger balance of \$3,305 with no outstanding deposits or checks. Today, your firm deposited 9 checks in the amount of \$392 each and wrote 13 checks in the amount of \$637 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 19
As of this morning, your firm had a ledger balance of \$3,237 with no outstanding deposits or checks. Today, your firm deposited 3 checks in the amount of \$496 each and wrote a check in the amount of \$645. 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 20
1.
Month Sales \$ Month Sales \$
Jan         34,925 July         19,774
Feb         16,394 Aug         36,030
Mar         36,030 Sep         34,925
Apr         19,774 Oct         36,030
May          34,925  Nov         16,394
June         16,394 Dec         19,774
2.
3.      The company has estimated expenses as follows:
Material purchases are 67 percent of sales. Material purchases are paid in the month following the purchase.
Interest payment per month: \$3,766
Rent expenses per quarter starting March: \$2,624
4.      Calculate the cash outflows for June.
5.      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
ABC Company has a cash cycle of 10.43 days, an operating cycle of 21.48 days, and an average collection period of 6 days. The company reported cost of goods sold of \$293,104. 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 22
Indicate the effect of the following on the cash cycle: Customers take longer to make the payment
No change
Decrease
Increase

QUESTION 23
Indicate the effect of the following on the cash cycle: Accounts payable turnover goes up
Decrease
Increase
No change

QUESTION 24
Indicate the effect of the following on the cash cycle: Accounts payable period goes up
No change
Decrease
Increase