Finance 330 chapter 16

Activities that increase cash

-Increasing long-term debt (borrowing over the long term) -Increasing equity (selling some stock) -Increasing current liabilities (getting a 90-day loan) -Decreasing current assets other than cash (selling some inventory for cash) -Decreasing fixed assets (selling some property)

Inventory period equals _______ days divided by the inventory turnover.

365

Receivables period equals _________ days divided by the receivables turnover.

365

The payables period equals __________ days divided by the payables turnover.

365

The cash cycle is equal to the operating cycle minus the Blank______ period.

Accounts Payable

Which of the following represents a source of cash A. repurchasing stock B. accounts receivable increases C. accounts payable increases D. paying off a loan

Accounts payable Increases

The operating cycle equals the sum of the inventory period and the Blank______ period.

Accounts receivable

The time between paying cash for inventory and receiving cash from selling a product is called the Blank______.

Cash Cycle

What does an average collection period of 57 mean?

Customers took on average 57 days to pay

Sources of cash can involve increasing a(n) Blank______ account. Multiple select question. equity liability fixed asset current asset

Equity Liability

True or false: The collection cycle is the difference between disbursement and collection of cash.

False

Uses of cash can involve increasing a(n) Blank______ account.

Fixed Assets non cash current assets

What does an inventory period of 111 days mean?

On average, inventory sat for about 111 days before it was sold.

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

Operating

Place the steps of the operating cycle in order from first to last. Instructions Choice 1 of 3. Collect cash from the sale. toggle button Collect cash from the sale. Choice 2 of 3. Order inventory. toggle button Order inventory. Choice 3 of 3. Sell the finished product. toggle button Sell the finished product.

Order Inventory Sell the finished product Collect Cash

Which of the following firm activities decrease cash? Multiple select question. selling inventory paying off debt selling property repurchasing stock

Paying off debt Repurchasing stock

Which of the following represents a use of cash? repurchasing stock accounts receivable increases accounts payable increases paying off a loan

Repurchasing stock Accounts receivable increases Paying off a loan

Carrying costs Blank______ with the level of investment in current assets.

Rise

Which of the following are shortage costs? Multiple select question. safety reserve costs depreciation costs order costs dividend payout costs

Safety Reserve Cost Order Costs

Those firm activities that decrease cash are called Blank______.

Uses of cash

Which of the following activities decrease cash? Multiple select question. decreasing equity increasing fixed assets decreasing fixed assets increasing current liabilities

decreasing equity increasing fixed assets

Which activities are primary to short-term finance? financing activities investing in fixed assets operating activities selling stock and bonds

financing activities operating activities

Uses of cash can involve increasing a(n) Blank______ account. Multiple select question. long-term debt fixed asset equity noncash current asset

fixed asset noncash current asset

The primary concerns in short-term finance are the firm's short-run _____________ and financing activities.

operating