• Which of the following activities impacts the long-term cash flow?

1. Purchase inventory
2. Pay rent and utilities
3. Pay taxes
4. Purchase PP&E

• Which of the following strategies is most likely to shorten the working capital funding gap?

1. Provide discounts for customers
2. Extend payment to suppliers
3. Extend credit for customers
4. Keep more inventory on hand

• Calculate accounts receivable days based on the information below:
• Revenues: 2,500,000
• Costs of goods sold: 1,600,000
• Days in period: 365
• Receivables: 300,000
• Inventories: 150,000
• Payables: 200,000

1. 57.2
2. 43.8
3. 68.4
4. 31.9

• What's the company's working capital funding gap in days based on the information below?
• Receivable days: 47.2
• Inventory days: 34.5
• Payable days: 45.6
• Days in the period: 365

1. 32.9
2. 36.1
3. 41.3
4. 58.3

• Based on the information below, how much does the company need to finance the working capital funding gap and how much is the lender willing to provide?

Funding gap (days)	35	Days in period	365
Revenues	2,500,000	Cost of goods sold	1,600,000

	Balance	Up to
Receivables	300,000	50%
Inventories	150,000	50%

1. Financing required = 175,243; Financing allowed: 450,000
2. Financing required = 153,425; Financing allowed: 225,000
3. Financing required = 239,726; Financing allowed: 225,000
4. Financing required = 208,197; Financing allowed: 450,000

• The cash conversion cycle measures:

1. The amount of cash needed to cover the operating and investing expenses
2. The composition of inventory in a manufacturing facility
3. The number of days it takes for a company to turn its resource inputs into cash
4. The number of days cash is in the bank

• Calculate the ROI based on the cash flows of each year:

	2020	2021	2022	2023	2024	2025
Cash Flows	-$2,000	$100	$300	$500	$700	$900

1. 45%
2. 15%
3. 25%
4. 35%

• Calculate the net cash provided by the operating activities based on the information below:
• Net income: 60,000
• Depreciation: 25,000
• Increase in accounts receivable: 12,000
• Increase in inventory: 8,000
• Increase in accounts payable: 15,000

1. 90,000
2. 120,000
3. 70,000
4. 80,000

• Calculate the total capital expenditure of 2018 based on the information below:
• 2017 PP&E: 43,000
• 2018 PP&E: 65,000
• 2017 Depreciation: 10,000
• 2018 Depreciation: 12,000

1. 44,000
2. 53,000
3. 34,000
4. 12,000

• Calculate the company's free cash flow for the current year based on the information below:
• Net income: 60,000
• Depreciation: 25,000
• Increase in accounts receivable: 12,000
• Increase in inventory: 8,000
• Increase in accounts payable: 15,000
• Capital expenditures: 45,000
• Increase in long-term debt: 15,000

1. 50,000
2. 20,000
3. 35,000
4. 25,000