11. What is the inventory period? A. 35 days B. 41 days C. 51 days D. 55 days

Credit Sales = $175,000 COGS = $125,000 How many days are in the receivables period? A. 45 days B. 47 days C. 61 days D. 64 days

13. I.R. Ruth, Inc. has an inventory turnover rate of 16.59, an accounts payable period of 51 days, and an accounts receivable period of 34 days. What is the length of the cash cycle? A. -2 days B. 5 days C. 8 days D. 13 days

14. Natural Woods has a 60 day accounts payable period. The firm has expected sales of $3,200, $3,800, $4,600, and $4,800, respectively, by quarter for the next calendar year. The cost of goods sold for a quarter is equal to 60% of the next quarter sales. What is the amount of the projected cash disbursements for accounts payable for the third quarter of the next year? Assume that a year has 360 days. A. $2,880 B. $3,280 C. $3,360 D. $2,800

15. Your firm sells $6,000 worth of goods in December, $4,700 worth in January, $5,100 in February, and $5,800 in March. Your cost is 65% of your selling price. You have a receivables period of 30 days and a payables period of 60 days. You buy your products one month prior to selling them. How much will you pay on your accounts payable in February? A. $3,165 B. $3,315 C. $3,543 D. $3,055

16. ALPHA, Inc. sells all of its products on credit. Purchases are 60% of the sales for the following quarter. The firm uses a 365-day year and account averages where applicable in its computations. The financial manager of the firm provides the following relevant information: . What is the accounts receivable balance at the end of Quarter 1? A. $2,878 B. $3,333 C. $3,533 D. $4,122

17. At the beginning of the year, you have an outstanding short-term loan of $684 which was used to cover your cash needs for the previous year. During the current year, you expect to pay $34 in interest. The projected net cash flow for the year is $403, excluding the interest payment. What is your anticipated loan balance at year end? A. $0 B. $315 C. $383 D. $1,121

18. Wyler, Inc. has a beginning cash balance of $380 on March 1. The firm has projected sales of $550 in February, $700 in March, and $800 in April. The cost of goods sold is equal to 75% of sales. Goods are purchased one month prior to the month of sale. The accounts payable period is 30 days and the accounts receivable period is 15 days. The firm has monthly cash expenses of $200. What is the projected ending cash balance at the end of March? Assume that every month has 30 days. A. $280.00 B. $317.50 C. $392.50 D. $430.00

19. As of the beginning of the quarter, Trellis Florists has a cash balance of $420. During the quarter, suppliers are paid $840, receivables of $1,010 are collected, taxes of $260 are paid, and $55 is borrowed. What is Trellis' cash balance at the end of the quarter? A. $295 B. $310 C. $385 D. $415

20. The Western Bank has been discussing the possibility of implementing a lockbox system for one of its customers. Thus far, the bank has gathered the following information about the customer's account: What is the net present value of adopting the proposed lockbox system? A. -$26,820 B. $9,360 C. $11,280 D. $37,360

21. The BDF Co. receives five cheques per month, each month. The payments and clearing times are: $4,000, two days; $6,000, two days; $3,000, five days; $8,000, three days, and $7,000, four days. Assume a 360-day year. What are the average daily receipts? A. $76.71 B. $686.67 C. $933.33 D. $1,019.19

22. Which of the following is the best definition of zero-balance account? A. The costs associated with holding too little cash. B. A chequing account in which a zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover cheques presented. C. The need to hold cash to satisfy normal disbursement and collection activities associated with a firm's ongoing operations D. A firm's desired cash level as determined by the trade-off between carrying costs and shortage costs.

23. Which of the following is the best definition of adjustment costs? B. An automated teller machine card used at the point of purchase to avoid the use of cash. As this is not a credit card, money must be available in the user's bank account. C. A chequing account in which a zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover cheques presented. D. The need to hold cash to satisfy normal disbursement and collection activities associated with a firm's ongoing operations E. The costs associated with holding too little cash.

24. Which of the following is the best definition of target cash balance? A. The costs associated with holding too little cash. B. An automated teller machine card used at the point of purchase to avoid the use of cash. As this is not a credit card, money must be available in the user's bank account. C. A chequing account in which a zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover cheques presented. D. A firm's desired cash level as determined by the trade-off between carrying costs and shortage costs.

25. Which of the following is the best definition of transaction motive? A. The costs associated with holding too little cash. B. An automated teller machine card used at the point of purchase to avoid the use of cash. As this is not a credit card, money must be available in the user's bank account. C. The need to hold cash to satisfy normal disbursement and collection activities associated with a firm's ongoing operations. D. A firm's desired cash level as determined by the trade-off between carrying costs and shortage costs.

Accounts receivable period Inventory period Accounts payable period 37 days 51 days 42 days Account Sales Wages Overhead expenses Dividends Interest expense Quarter $7,000 $2,000 $500 $125 $350 Quarter 2 $6,000 $1.500 $400 $125 $150 Quarter 3 $8.000 $2.000 $300 $125 $200 Quarter + $9,000 $2.500 $600 $125 $300 Average value of each cheque deposited Average number of cheques deposited each day Variable lockbox fee on each transaction Daily interest rate on money market securities Average reduction in clearing time $1.005.00 36 $0.35 0.02% 2 days Accounts receivable period Inventory period Accounts payable period 37 days 51 days 42 days Account Sales Wages Overhead expenses Dividends Interest expense Quarter $7,000 $2,000 $500 $125 $350 Quarter 2 $6,000 $1.500 $400 $125 $150 Quarter 3 $8.000 $2.000 $300 $125 $200 Quarter + $9,000 $2.500 $600 $125 $300 Average value of each cheque deposited Average number of cheques deposited each day Variable lockbox fee on each transaction Daily interest rate on money market securities Average reduction in clearing time $1.005.00 36 $0.35 0.02% 2 days