Please see questions and answers below. If you believe they are incorrect please explain. Also please show work.

__C__ 1. Which one of the following activities will increase cash? a. increasing inventory b. repurchasing shares of stock c. increasing accounts payable d. buying new equipment Answer C will increase cash. With the others you will have to spend money which will reduce cash. __A or C__ 2. Which one of the following will decrease the cash cycle? a. increasing the inventory period b. decreasing the accounts receivable turnover rate c. increasing the accounts receivable period d. decreasing the accounts payable turnover rate

The beginning of the cash cycle occurs when you invest money in your business and purchase raw materials and other inputs to begin the production process. As long as the money is invested, it remains a part of the cash cycle. Cash cycle ends when you receive the cash. __A__ 3. The Gift Mart has sales of $832,000 and cost of goods sold of $591,000. What is the accounts receivable period if the average receivables balance is $63,400? a. 27.81 days b. 29.64 days c. 37.08 days d. 39.16 days

The Accounts Receivable Period= 63,400 / (832,000 / 365) = 27.814 days __D__ 4. Which of the following are associated with a restrictive short-term financial policy? I. low cash balance II. minimal investment in marketable securities III. high level of accounts receivable IV. high number of inventory stock-outs a. II and IV only b. I, II, and IV only c. I, III, and IV only d. I, II, III, and IV __A__ 5. West Coast Ventures has annual sales of $942,000. Cost of goods sold equal 69 percent of sales. The average accounts receivable balance is $83,600 and the average accounts payable balance is $142,700. How long on average does it take this firm to pay its creditors? a. 55.29 days b. 46.95 days c. 80.13 days d. 116.13 days Account payable turn over = 942000 / 142700 = 6.601 Average days it take to pay creditors = 365 / 6.601 = 55.29 days __B__ 6. A firm has projected monthly sales of $16,400, $17,300, and $18,500 for the months of January, February, and March, respectively. December sales were $21,700. The firm collects 35 percent of its sales in the month of sale, 62 percent in the month following the month of sale, and 3 percent in the second month following the month of sale. What is the amount of the February collections? a. $16,454 b. $16,874 c. $17,108 d. $17,693

Dec. Sales = 21700 x .03 = 651 Jan. Sales = 16400 x .62 = 10168 Feb. Sales = 17300 x .35 = 6055

Therefore, February collections = 651 + 10168 + 6055 = 16874

__A__ 7. Alfa Industries has a line of credit with their local bank. The loan terms require the loan be paid in full for at least one 60-day period per year. What is this 60-day period called? a. grace period b. factor period c. revolver period d. cleanup period __D or B__ 8. Global Exporters has an arrangement with its bank to factor its receivables on an ongoing basis. Which one of the following statements is most likely correct given this arrangement? a. Global Exporters will sell its receivables for full value. b. The bank is responsible for collecting the accounts receivable. c. Global Exporters will have to repay the bank for any uncollected receivable. d. The receivables are assigned as collateral but remain an asset of Global Exporters. __B__ 9. A firm has an ending cash balance of $1,700 and a cumulative surplus of $1,300. What is the minimum cash balance? (maybe D? Add or subtract?) a. $0 b. $400 c. $1,500 d. $3,000

Ending cash balance = $1,700

Cumulative surplus = $1,300

Minimum cash balance = 1700 - 1300 = $400

__C__ 10. Which one of the following financial policies is most apt to increase the short-term borrowing needs of a firm?

a. flexible b. restrictive c. compromise d. cannot be determined