3. Which one of the following statements is correct concerning the cash cycle? A. The longer the cash cycle, the more likely a firm will need external financing. B. Increasing the accounts payable period increases the cash cycle. C. A positive cash cycle is preferable to a negative cash cycle. D. The cash cycle can exceed the operating cycle if the payables period is equal to zero. E. Offering early payment discounts to customers will tend to increase the cash cycle.

4. You are the CFO of a business-seasonal firm specializing in products related to water sports. The firm purchases inventory one month before it is sold and pays for its all purchases 60 days after the invoice date. Sales are always highest during the months of July and August. You are in the process of preparing the cash disbursements section of your companys cash budget. Which one of the following statements is supported by this information? A. Inventory purchases will be highest during the months of July and August. B. Inventory purchases will be highest during the months of May and June. C. Payments to suppliers will be highest during the months of June and July. D. Payments to suppliers will be highest during the months of July and August. E. Payments to suppliers will be highest during the months of August and September.

5. Media Modeling Insights (MMI) has $250,000 in accounts receivable. To finance a major purchase, the company assigns these receivables to Citibank. Which one of the following statements correctly describes this transaction? A. MMI will immediately receive $250,000 and will have no further obligation related to these receivables. B. MMI will receive some amount of cash immediately while maintaining full responsibility for any uncollected receivables. C. Citibank accepts full responsibility for the collection of the accounts receivables and, in exchange, immediately pays MMI a discounted value for its receivables. D. Citibank accepts full responsibility for collecting the accounts receivables and pays MMI a discounted price for the accounts collected after the normal collection period has elapsed. E. MMI receives the full amount of its receivables upon assignment but must reimburse Citibank for any uncollected account.