Finance-Ch16

inventory is purchased; payment is received for the sale of that inventory

By definition, the operating cycle begins when _____ and ends when_____.

carrying

Costs that increase as the level of investment in current assets increases are called _____ costs.

net 10

Which one of the following credit terms is most apt to produce the shortest accounts receivable period?

granting credit to a customer

Which one of the following is a use of cash?

purchasing new fixed assets

Which one of the following is a use of cash? (2)

high ratio of current assets to sales

Which one of the following is indicative of a flexible short-term financial policy?

increasing the inventory period

Which one of the following will increase the operating cycle?

carrying costs

costs that rise with increases in the level of investment in current assets

cash flow time line

graphical representation of the operating cycle and the cash cycle

inventory period

the time it takes to acquire and sell inventory

operating cycle

the time period between the acquisition of inventory and the collection of cash from receivables

the future cash needs of a firm

A cash budget determines which one of the following?

secured short-term

Accounts receivable financing is the term used to describe which of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivables?

sale of an item; receipt of payment for that sale

The accounts receivable period is the time that elapses between the _____ and the _____.

shortage

The costs incurred because a firm's investment in current assets is low are called _____ costs.

accounts receivable period plus the inventory period.

The operating cycle is equal to the:

cash budget

a forecast of cash receipts and disbursements for the next planning period

line of credit

a formal (committed) or informal (non-committed) prearranged, short-term bank loan

accounts receivable financing

a secured short-term loan that involves either the assignment or factoring of receivables

inventory loan

a secured short-term loan to purchase inventory

shortage costs

costs that fall with increases in the level of investment in current assets

cash cycle

the time between cash disbursement and cash collection

accounts payable period

the time between receipt of inventory and payment for it

accounts receivable period

the time between sale of inventory and collection of the receivable