Chapter 16 LearnSmart

What is the inventory period if the inventory turnover is 10 times?

36.5 days (365/10)

If inventory is acquired on day zero and paid for on day 40, and then the product is sold and cash is collected for the sale on day 100, the cash cycle equals

60 days

Short term finance primarily concerned with

Current assets and current liabilities

Short term finance is concerned with current assets and current liabilities, whereas long term finance is concerned with

Dividend policy, capital budgeting, and capital structure

What activities are primary to short term finance?

Operating activities Financing activities

The cash budget allows the firm to identify

Short term financial needs Short term financial opportunities

The time from the acquisition of inventory to when the inventory is paid for is called the

accounts payable period

The time is takes to collect on the sale of a product is called the

accounts receivable period

The operating cycle =

inventory period + accounts receivable period

The cash cycle =

operating cycle - accounts payable

The operating cycle is

the time from when inventory is acquired until cash is collected from the sale of the product.